Where’s the truth? SHA’s numbers don’t add up
Social Health Authority signage at Mutuini Hospital in Dagoretti South Sub-County, Nairobi, on August 27, 2025.
Kenya's new health insurer has more members, charges more money, and is losing billions. The old one, with fewer members and lower premiums, ran a surplus.
When the government replaced the National Health Insurance Fund (NHIF) with the Social Health Authority (SHA) in 2024, the pitch to Kenyans was straightforward: NHIF had failed, and a new, better-designed scheme would cover more people, offer broader benefits, and put health insurance on a sustainable footing.
Two years after SHA replaced NHIF, the scheme is spending far more than it is collecting, and hospitals, patients and lawmakers are feeling it.
According to the recently released Economic Survey 2026, the Social Health Insurance Fund (SHIF), the contributory arm of SHA, collected Sh57.7 billion in the financial year 2024/25 and paid out Sh91.5 billion in claims. The difference, Sh33.8 billion, is money the scheme does not have. Its utilisation ratio stands at 158.6 per cent: for every Sh100 the scheme collects, it spends Sh159.
Behind that number are real people. The 158.6 utilisation ratio translates directly into unpaid claims sitting in hospital accounts across the country. Facilities that continued providing services to SHA members on the understanding that reimbursement would follow are carrying billions in unrecovered costs.
NHIF, the scheme SHA replaced, collected Sh82 billion in its final full year of operation in 2023 and paid out Sh68 billion, a pay-out ratio of 83.2 per cent. It was not a perfect institution, but on the most basic measure of whether a health insurer is viable, collecting more than it spends, it passed. "SHA is not," the Economic Survey says.
Under NHIF, the contribution structure was flat: formal sector workers paid Sh900 a month, while informal sector contributors, when they paid at all, paid as little as Sh300. A millionaire and a junior civil servant paid the same amount.
National Assembly committee on Health chairperson and Seme MP James Nyikal.
Seme MP James Nyikal, who chairs the National Assembly's Departmental Committee on Health, had raised the concern early. "The revenue that SHA collects is really not enough to meet its expenses. As things stand now, they are barely getting what they need to run," he said.
Collected Sh159.34 billion
SHA chief executive officer Dr Mercy Mwangangi pushed back when she appeared before the National Parliamentary Health Committee in Mombasa last month, insisting that SHA is not dead and that the authority is running a surplus.
SHA Chief Executive Officer Dr Mercy Mwangangi.
"The authority has collected Sh159.34 billion in contributions since its establishment and disbursed Sh122.34 billion to healthcare providers, generating a net operating surplus of Sh36.99 billion, against NHIF's net deficit of Sh2.26 billion in its final year," she said.
The Economic Survey says the opposite. So who is telling the truth?
Dr Nyikal says the surplus figure tells only part of the story. "A surplus on paper means little if the money earmarked for the Primary Healthcare Fund is insufficient, if NHIF legacy debts remain unpaid, and if informal sector loss ratios continue accelerating toward figures that no fund can sustain," he said.
Even as SHA points to that surplus, hospitals have been pressing the authority to settle outstanding claims, with some reporting they have not been paid for close to three months, with amounts running into billions of shillings.
Dr Nyikal said the design and concept are good and that what SHA is going through is a problem of implementation requiring cooperation from management, providers and the public.
"SHA has the architecture, the digital tools, and the political backing of a government that has staked considerable credibility on its success. What it does not yet have is the 24 million registered Kenyans who are not paying. Until that changes, the surplus will continue to look different depending on which column of the ledger you are reading, and the dream of Universal Health Coverage, a Kenya where no one skips treatment because they cannot afford it, will remain exactly that," he said.
"If people wait until they are sick to register and pay, then immediately incur huge costs, where does the money come from? We must build a culture where Kenyans pay in advance to create a sustainable pool," he added.
Without the informal sector, he said, "the numbers do not add up."
"The informal sector is the majority of the population. They must become regular contributors to SHA, not when they are sick, not when they are forced to, but as a habit, a norm, a reflex. That requires trust in a system that has historically let them down, simplicity in processes that are currently anything but simple, and enforcement mechanisms," he said.
Mismanagement
The fund was built on the principle that if everyone contributes, the healthy subsidise the sick, the young subsidise the old, and the system sustains itself over time. That model broke down under NHIF, brought down by mismanagement, fraud, and a benefit package that could not keep pace with the actual cost of care.
SHA was supposed to fix all of that. The new system separated contributions into three funds: SHIF, which covers inpatient and specialised care; the Primary Healthcare Fund, financed directly from the exchequer for outpatient services at lower-level facilities; and the Emergency, Critical and Chronic Illness Fund. Each fund has its own bank account, and the law prohibits moving money between them.
SHIF charges 2.75 per cent of gross income, meaning higher earners pay significantly more. It was also designed to pull in the informal sector at scale, a segment NHIF had largely failed to reach, but it has failed more. Using means testing, the authority has been unable to bring more Kenyans in the informal sector into the scheme.
By the end of 2024/25, SHA had registered approximately 29 million members, a figure the government has pointed to repeatedly as evidence of progress. Of those, only about five million are actively paying premiums. The rest signed up and walked away, and those who do pay are largely the already sick, they enrol, access care and drop off, leaving the fund with bills it cannot absorb.
"SHIF collected Sh24 billion less than NHIF did in its last year, from a larger membership base, charging income-linked contributions that should, in theory, yield more from formal sector workers than a flat Sh900 ever did," the Economic Survey notes.
According to the Kenya National Bureau of Statistics, the informal sector represents 83 per cent of the country's workforce, totalling 19.9 million workers against just 3.1 million salaried employees. For every shilling that informal sector workers contribute to SHA, the fund pays out more than Sh26 in claims, and the ratio is getting worse.
The authority is currently facing mounting pressure from debt to hospitals and an informal sector that has largely stopped contributing, raising serious questions about its sustainability.
The challenge mirrors what brought NHIF down, where only the sick consistently paid premiums and many dropped off once they received full benefits. Under NHIF, only 22 per cent of registered informal sector members were active against a target of 74 per cent, while the retention rate for formal sector workers was 77 per cent against a targeted minimum of 88 per cent, leaving the insurance unable to settle claims or meet administrative costs.
Received Sh10.2 billion
SHIF is not the only fund under pressure. The Primary Health Care Fund received Sh10.2 billion in 2024/25 and spent Sh9.78 billion, a utilisation rate of 95.5 per cent, leaving almost no reserve. The Emergency, Chronic and Critical Illness Fund received Sh1.3 billion and spent Sh1.26 billion, a utilisation rate of 95.2 per cent, again, virtually nothing left.
These two funds depend on the Treasury releasing money, not on member contributions. In a year when national government health expenditure is projected at Sh150.9 billion, a 22.8 per cent increase, the pressure on public finances is already significant. County governments are projected to spend Sh133.4 billion on health, a 23.3 per cent increase, putting total public health spending across both levels of government at more than Sh284 billion annually.
Kenya is spending more on health than at any point in its history. And its health insurer is still running out of money.
The Rural Private Hospitals Association of Kenya chairman Brian Lishenga.
Dr Brian Lishenga, Chairman of the Rural and Urban Private Hospitals Association (RUPHA), has repeatedly raised the alarm. Hospitals that cannot absorb the losses have begun demanding cash from patients who are technically insured, or quietly limiting the services they offer under SHA. "The promise on the patient's SHA card and the reality at the facility reception desk are no longer the same thing," he said.
He said SHA made a mistake by not creating awareness of its benefits package, including what it covers for those in the informal sector, before the launch, and that irregular incomes make fixed monthly contributions impractical for many such households.
"SHA is a health insurance that requires a completely different mindset. You pay when you are well, so that the system can afford to treat you when you are sick. Convincing millions of Kenyans who earn irregular incomes, who have competing financial priorities, and who have historically had little reason to trust government institutions to adopt that mind-set was never going to be simple," he said, adding that lack of formal identification documents among some of the most vulnerable populations, and weak enforcement mechanisms that mean non-contribution carries no real consequence, are the main drivers of defaulting.
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