How to ensure we have affordable healthcare

Inflation is taxation without legislation, the renowned economist, Milton Friedman, once said. This is true for Kenya where inflationary pressure on healthcare is taxing citizens to death.

A 2017 survey by insurance brokerage firm, Minet Kenya, revealed that general inflation in 2017 stood at 8.02 percent.

This, however, was way below medical inflation, which stood at 12 per cent. For too many families, healthcare costs swallow most of their income, to the extent of surpassing what they spend on food, rent and other basic necessities combined.

RISING CLAIMS

Kenya’s insurance regulator, the Insurance Regulatory Authority (IRA), has noted that while the medical insurance industry marginally grew in gross premiums by 0.65 percent in 2017, claims incurred over the same period increased by 12 percent.

If the trend continues, premiums will rise and only a few will manage to sustain health insurance. 

Last week, listed companies expressed their fears about the rising healthcare cost.

In the past year alone, healthcare cost rose by 11 percent having paid out a total of Ksh. 3.7 billion in medical cost up from Ksh. 3.3 billion paid last year, an increase of Ksh. 400 million.

Studies show that the rising cost is caused by a combination of lack of policy and the rising cases of lifestyle diseases.  Health providers too, are to blame for rising cost. 

CAPTIVE MARKET

In the past three months, I have randomly requested patients to share their hospital bills with me.  Simple analytics of these bills will make you sick.  The mark up on supplies by hospitals range from 30 to 500 percent.

A pair of gloves costing Sh100 from a retail pharmacy costs an obscene Sh500 in some hospitals. 

This is happening at a time when the government is looking towards providing universal healthcare. 

It doesn’t take any genius to predict failure if hospitals become retailers of supplies to a captive market at exorbitant prices which in my view is immoral.   

Other studies argue that demand for health services far outstrip the supply.  Hence the reason why there are many private healthcare providers to ease the problem of congestion in public hospitals. 

These hospitals compliment government in provision of healthcare services.  Some, however, have a different objective of making money with the lowest service possible as a measure to cut cost.

REGULATORY FRAMEWORK

Like in public sector, private health providers need to be classified, and a proper regulatory framework put in place. 

In an era of sharing economy (system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the Internet), there is need to synchronize activities of private care providers with public hospitals.  

In a developing country like Kenya there is no justification for every hospital to have all manner of equipment that in most cases lie idle. 

For example, if there are five hospitals in a county, it makes more sense sharing some services like radiology. Once the technician takes impressions, the radiologists can be providing their services from anywhere in the world.

The government investment in equipment throughout in public hospitals throughout the country should complement activities of private sector and generate volume that will lower the cost. 

Indian healthcare is considered cheap because of volumes so that their cost is sometimes five times cheaper than the local cost for similar services.  

If resources are optimally utilised, it benefits the country given that it will lead to greater capacity development and more efficient service delivery.

LIFESTYLE DISEASES

Let me get back to rising cases of lifestyle diseases and policy gaps.  First, lifestyle diseases are causing havoc in Kenya.  Yet, many assume that those are rich people’s diseases. 

A 2014 World Health Organization report says that, of the estimated 1.5 million global diabetes deaths in 2012, more than 80% occurred in low- and middle-income countries.

About 1 percent of deaths in Kenya were directly attributable to diabetes in 2012. Like in developed countries, these deaths can be stopped if people embraced an active lifestyle to wade off such diseases.

On policy there is need for reforms especially in the National Hospital Insurance Fund (NHIF).  A few patients I interviewed in Nairobi, Mombasa, Narok and Kilifi, reveal that NHIF has wide discretion on payment of bills. 

Similar procedures in Nairobi and Mombasa attract different pricing.  In one such case, a patient paid Sh250,000 in Nairobi and Sh40,000 in Mombasa forcing the patient to top up the balance.  NHIF need to set standards for similar procedures living no room for personal discretion.

Discretion is discriminatory and forces the patients to seek help where the bill will fully be settled. 

It also undermines the government’s desire to evenly distribute caregivers throughout the country.  A non-discriminatory policy around a standardised system will force other caregivers to consider county medical services, and reduce the need by patients to travel far seeking medical services.

These policy proposals cannot be achieved without leveraging technology. NHIF should seek to have any health facility that seeks to be paid through public insurance, must be in one blockchain. 

Like many other countries like South Africa, Parliament must pass the law limiting the margins of supplies by hospitals. Technology, will monitor the pricing of supplies to discourage immoral profits.  The system will also monitor unnecessary prescriptions meant to enrich hospital pharmacies.

The government must mount a serious awareness campaign on the effects of lifestyle diseases with the aim of diagnosing them early and managing them to avoid hospitalisation. 

DISEASE MANAGEMENT

This is also true for diseases like cancer that are on the rise. These diseases can be managed or cured if they are detected early. 

Diagnostics are perhaps the most important aspect of disease management. Many of those suffering hypertension that are not diagnosed indeed collapse and die or require lengthy hospitalisation making it expensive for NHIF.

We all must ensure that we are building a sustainable universal health. It must be our collective responsibility. 

We must point out faults and correct them early enough to build a good health system. 

For now, we have started on the wrong footing. Reforms at NHIF are imperative in order to build a sustainable future healthcare system. 

In as much as studies have pointed out the sources of escalating cost, we must look closely and identify other sources – immoral pricing – that could easily derail the nascent universal healthcare system for Kenya.

The writer is an associate professor at University of Nairobi’s School of Business.