New scheme replaces NHIF in bid to boost health sector changes
The National Hospital Insurance Fund building Nairobi County in this picture taken on March 16, 2023.
What you need to know:
- Lawmakers are investigating allegations of collusion, overbilling and connivance at the NHIF.
- The National Assembly will allot funds to the SHIF for its social health insurance functions.
The financial scandals that have been synonymous with the National Health Insurance Fund (NHIF) may be a thing of the past following the passage of the Universal Health Coverage (UHC) reforms that bar the public insurer from engaging in commercial insurance.
Instead, the NHIF, renamed the Social Health Insurance Fund (SHIF) under the Social Health Insurance Act, will be confined to its mandate of developing social health insurance.
This now paves the way for the Director General of the Public Procurement Regulatory Authority (PPRA), Patrick Wanjuki, to develop guidelines on how public procurement of commercial insurance providers will be conducted.
The NHIF has been in charge of procuring commercial insurance providers, charging a five percent administration fee on every contract awarded to insurers.
The five percent became an attractive way for the NHIF to mint money, and in doing so, it turned its back on its core mandate of providing social insurance services. The Social Health Insurance Act establishes the Social Health Insurance Fund (SHIF).
Unlike under the NHIF regime, the National Assembly is now required to appropriate funds to the SHIF each financial year to enable it to carry out its social health insurance functions.
"Money appropriated by the National Assembly for indigent and vulnerable persons and gifts, grants, innovative financing mechanisms or donations shall be paid into the fund," the new law states.
This means that the enhanced public service schemes and other enhanced benefits, including Group Personal Accident (GPA), Work Injury Benefits (Wiba) and Group Life (GL), which the NHIF has overseen, are now outside the purview of the SHIF "and shall therefore be excluded from being an annex of the social health insurance scheme".
The SHIF scheme, as structured, is comprehensive to meet all the medical needs of all members on an end-to-end basis and therefore there is no need for public institutions to consider underwriting commercial health insurance schemes.
Section 19 of the Insurance Act provides that only entities registered with the Insurance Regulatory Authority (IRA) may undertake commercial insurance business in the country.
However, a gazette notification was issued exempting the NHIF from the provisions of the Insurance Act and therefore from engaging in commercial insurance on the basis of risk sharing.
This made it mandatory for public institutions to place compulsory civil service and post-retirement medical benefits with the NHIF.
The NHIF Act empowered the NHIF Board to engage in risk spreading and claims administration and allowed the Insurance Regulatory Authority to supervise risk spreading and the Retirement Benefits Authority (RBA) to supervise post-retirement contributions.
Following a circular from then Head of the Civil Service, Joseph Kinyua, the NHIF embarked on its journey into commercial insurance by offering an enhanced medical scheme to civil servants, the National Police Service, parastatals, State corporations and semi-autonomous government agencies at the expense of the common man.
This coincided with the increased contracting of hospitals under the NHIF panel from the existing 3,000 to over 10,000 hospitals providing inpatient, outpatient and specialised care to members of the expanded scheme.
The entrenchment and focus of the NHIF as an institution and its staff shifted towards claims and billing due to the huge resources that came with the expanded medical schemes.
But this focus has brought with it the mischief associated with malpractice in the health sector, related to fraud, overbilling, overtreatment, collusion and connivance, issues that are currently being investigated by the National Assembly Health Committee.
The malpractices could be linked to the recent booming and rapid expansion of the medical sector, especially clinics and pharmacies.
In the recent past, all hospitals have been transformed into five-star hotels after major renovations, while diagnostic centres and fancy pharmacies dispensing exotic and expensive drugs have sprung up in large buildings across the country.
With the health insurance reforms, this means that the public insurer has no room for the expanded scheme and commercial insurance, leaving the public insurer to stick to the development of social insurance.
Data presented in Parliament shows that NHIF collects about Sh85 billion annually, which translates to about Sh435 billion over a five-year period that has pumped into the economy annually, but which has largely benefited private institutions.
