Contentious NHIF bill is feared could render more Kenyans jobless

By Steve Umidha

The Association of Kenya Insurers (AKI) has called for a re-look into the contentious National Hospital Insurance Fund (Amendment) Bill 2021, arguing that its passage in the current form could expose more working Kenyans to unemployment.

AKI further says that the bill – awaiting Parliament’s consent, will also be a blow to the insurance industry premiums which contributes slightly over 2 percent to the country’s Gross Domestic Product (GDP).

“The effect will also be felt by the employees in the insurance industry further aggravating the already bad unemployment situation in the country,” said the Association’s Chief executive Tom Gichuhi on Monday.

The association is now calling for a complete overhaul of the bill even as President Uhuru Kenyatta in his speech during the National Prayer Breakfast last week rallied the National Assembly to fast-track its passage.

“There are proposals before you that will ensure that all Kenyans have access to health insurance. They will allow us to ensure people are properly taken care of, not just during the pandemic but always,” said President Kenyatta last week.

President Kenyatta said that the Bill seeks to boost the Government’s quest in achieving the Universal Health Care (UHC), one of his Big Four Agendas.

The controversial bill which also faces opposition from the Central Organisation of Trade Unions (COTU) is still before the National Assembly and is yet to be debated on, and proposes to make it mandatory for every Kenyan above 18 years to pay an annual contribution of Sh6000 the NHIF.

Its impact, experts feel will overburden most working Kenyans currently reeling from the effects of the Coronavirus pandemic – with a growing number of Kenyan workforce presently operating on reduced salaries while majority are out of work.

The fund’s requirement for employers to match employee contribution, experts have also said will impact on the cost of labor.

Indeed, employers who have supplemented their employees’ NHIF insurance cover with private medical insurance may cease to do so or considerably reduce the benefits available to employees in a bid to mitigate the rise in labor related costs.

“High labor costs also make Kenya unattractive to foreign investors especially in labor intensive industries such as agriculture and hospitality services. Investors may opt to move to other countries, a big loss for the country,” argued Mr. Gichuhi.

Gichuhi further says that the Bill should provide room for and encouragement for voluntary action by individuals to provide more than the minimum required cover.

Further, insurers argue that the cost of providing private medical insurance would go up and in turn reduce uptake. As a result, Aki says there will be over reliance on NHIF cover, even if it is to be utilized upon exhaustion of private insurance.

Previous attempts by insurance industry experts to restructure the country’s largest medical scheme have continued to hit the wall.

Experts feel that the bill does not offer protection to taxpayers in the event that the fund runs into losses which would ordinarily mean that some of the losses would be transferred to the reinsurer.

“NHIF does not have any reinsurance arrangement and no reinsurer would be willing to come on board with the current financial situation at NHIF. This means that the fund is highly exposed,” says Gichuhi.

In 2019 for instance, a panel of experts, which included the insurance industry, was appointed by the then Health Cabinet Secretary to review the operations of NHIF and make recommendations key among them on-boarding a reinsurer to shoulder some of its risks.

Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.

The committee had also recommended a total overhaul and restructuring of NHIF which is yet to be undertaken – and whose absence continues to expose the fund to consistent losses.

In 2019 for instance, the fund is reported to have lost more than Sh10 billion in false medical claims.

The figure had been flagged as fraudulent and was part of about Sh50 billion paid to NHIF by Treasury as capitation premiums for medical cover for civil servants, Kenya Police Service, National Youth Service and Kenya Prisons Service since 2013.

The Article first appeared on People Daily