The government plans to issue loans to non-salaried people who will struggle to pay for the compulsory social health insurance where monthly contributions will be at 2.75 percent of the gross income.
The draft Social Health Insurance (General) Regulations, 2024 says while the salaried will pay for the premiums monthly, those not in salaried employment will be required to make one annual payment, based on the estimated 2.75 percent of their annual gross income.
The one-off payment is meant to overcome the rampant anti-selection challenge but presents a compliance burden for families, with the draft regulations allowing the government to bar those without up-to-date contributions from accessing public services.
Anti-selection is a phenomenon in which individuals with a higher probability of making a claim are more likely to purchase insurance.
The draft regulations say the Social Health Authority (SHA), the entity that is going to replace the National Health Insurance Fund (NHIF), will work with the Ministry of Co-operatives and micro, small and medium Enterprises (MSMEs) development in the provision of the loans to pay for insurance.
“The Authority, in collaboration with the Ministry responsible for co-operatives and MSMEs development and other financing institutions, shall provide premium financing to non-salaried persons to enable them to pay their annual contributions within the intervals under which their income becomes available,” reads the proposed regulations.
“The amount payable shall be paid fourteen days before the lapse of the annual contribution of the beneficiary.”
The loans, whose interest rate has not been specified, will see the non-salaried pay for the insurance for a whole year before starting to access the cover which promises to take care of primary healthcare, emergency, health services and chronic and critical illnesses.
The arrangement will help SHA avoid rampant anti-selection and defaults in premium, which has been one of the biggest headaches for NHIF.
For the case of NHIF, many non-salaried contributors have been making payments for at least three months when they have a major medical need such as surgery, and then dropping off once this need is met. Now with annual payments equaling premiums for 12 months, the State hopes to seal this loophole.
The draft regulations allow SHA to collect data from households for the purposes of conducting what it calls proxy means testing.
SHA will use the means testing instrument developed by the Ministry of Health in collaboration with the Ministry of Labour and social protection and the county governments.
The data collected from households will be based on various socio-economic aspects including housing characteristics, access to basic services and household composition and characteristics.
The data will be used to determine and estimate the household income for the purposes of the payment of the premiums. SHA will conduct periodic means testing reviews on these households.
Only the people classified as indigents will be excluded from making premium payments, with the State meeting this cost.
