While the general rate of inflation in Kenya has dropped rapidly over the past year, healthcare inflation – a measure of the cost of medical insurance premiums – has remained high. So in real terms your health company’s insurance premiums are likely to be going up.
We are seeing this situation due to a number of factors (which are not unique to Kenya): People are living longer but not necessarily healthier lives; healthcare costs are actually going up; and more people are making more use of private health insurance.
So what does it actually mean for your business? And what tools are at your disposal to address the problem?
The impact on your organisation
Assuming you already provide private medical insurance for some or all of your staff, you will have probably noticed some increases in the premiums you pay. And, especially if your profits are under pressure for other reasons, the high price of continuing to provide the same level of medical cover might seem like a heavy burden.
Especially if your profits are under pressure for other reasons, the high price of continuing to provide the same level of medical cover might seem like a heavy burden.
Even so, reducing your breadth of coverage, or even stopping providing private health insurance altogether, could be a costly mistake. Most people in Kenya who benefit from private medical insurance receive it as part of their employee benefits package. The benefits they receive are a major contributing factor to people feeling valued by their employer, leading to greater engagement and productivity.
Tactics for beating healthcare inflation
So a more positive approach to tackling the problem is to take action internally to try to bring down your health insurance outgoings.
Help your employees get healthier: According to the World Health Organisation (WHO), non-communicable diseases (NCDs) currently account for around 27% of all deaths of people in Kenya aged between 30 and 70. Key risk factors include smoking, alcohol consumption, raised blood pressure, and obesity.
One of the best ways to reduce the number of health insurance claims your staff make is to encourage healthier behaviour. This doesn’t necessarily mean you need to put a formal wellness scheme in place. Simple things like encouraging people to eat more healthily by making fruit available can make a difference. You could also encourage them to be more active by providing fitness activities at lunchtimes or even just putting signs next to lifts promoting the health benefits of taking the stairs instead.
You might also try setting up peer support groups, so those who have quit smoking and cut back on drinking alcohol can help inspire their colleagues to follow suit.
Getting employees involved in promoting healthy living is a great way to improve awareness of wellbeing in the workplace without appearing overbearing. Regular communications on wellbeing themes, through a staff newsletter, intranet or even notice boards, will also help to keep a positive approach to health at the front of employees’ minds.
Demonstrating that your company genuinely cares about its staff also improves engagement, so you may even find productivity going up as your health insurance premiums come down.
Make full use of NHIF to reduce claims costs: Despite facing many challenges since its creation in 1967, the NHIF has come to be a valuable and proud part of Kenya’s ongoing development. Established on the understanding that a nation with poor health leads to a weak economy and overall quality of life, the NHIF is now expanded to offer support to private and public workers.
The extent of cover through the NHIF is limited and is usually available in full for Category A government health facilities and partial cover for private and higher-level clinics (category B and C respectively). It is vital to be aware, however, that the Kenyan government encourages the partial use of NHIF for health issues that may also require use of Category B and C facilities. In these cases, as much of a rebate as is applicable by the NHIF is offered, with the remainder paid by the employer or individual or in many cases the insurance provider. Encourage your staff to use the facilities and cover available under their NHIF plan for themselves and for their dependants, as this will help reduce the cost of claims on your insurance schemes and result in lower increases at renewal, ensuring long terms sustainability of your staff health insurance plan. In fact, many local insurance providers are already insisting on paying less than what is claimable under the NHIF plans.
Despite some mistakenly believing otherwise, using the NHIF in this way to lower the overall cost of claims within your workforce is entirely legal and appropriate and is an excellent way for ensuring that your staff have access to the highest overall level of healthcare possible that your budget allows. By utilising what the NHIF can offer, you improve the lives of your workers and save your company money in one action.
By utilising what the NHIF can offer, you improve the lives of your workers and save your company money in one action.
Work with a network of more affordable medical providers: One way you can help to limit the value of health insurance claims your employees make is to restrict them to using a specific network of hospitals and clinics. Most insurance companies offer various levels of network, so you can choose a provider panel that works with your budget.
Encourage staff to be savvy healthcare consumers: As your employees don’t have to pay for private health insurance themselves, they may not be very concerned about the prospect of premiums going up. However it is important to educate them, so they can be aware that if they overuse the privilege, there may be negative consequences.
For example some may not realise that if they use their full allocation of cover in a year (their annual maximum benefit), they will need to pay for any additional services out of their own pocket. Simply making staff aware of this will help to open their eyes: the more they use their private health insurance, the higher the costs will be.
To contribute towards keeping premiums down, you might encourage employees to be more assertive when dealing with medical providers. For example, they might ask whether expensive tests such as MRI scans are strictly necessary; or request generic or parallel imported alternatives to expensive branded drugs.
Again, these are messages you can communicate through an internal newsletter or intranet, or even an occasional workshop.
Shift more of the financial burden onto employees: You might consider changing the structure of your health insurance plan, so employees take more financial responsibility.
One option is to put a deductible in place – an amount that employees are responsible for paying themselves each year before they can start claiming on their health insurance. Alternatively, or in addition, you could ask employees to make co-payments – contributions towards the cost of each service they use. These could be set at different levels for different services.
You may not want to take these actions straightaway. But, again, mentioning them to employees as possible options to keep your company’s health expenditure under control might encourage them to work with you to keep your claims down.
Implement a flexible benefits scheme: This is certainly not a quick fix, but you might consider launching a flexible benefits scheme, where employees can choose the mix of benefits that suit them, up to a total maximum value.
Giving individual employees the power to decide on their own benefits is a great way to make them feel appreciated. And, at the same time, it enables you to put a cap on the claims they can make on your health insurance programme.
Giving individual employees the power to decide on their own benefits is a great way to make them feel appreciated.
Taking control of your company’s health costs
Medical trend rates around the globe typically sit several percent above inflation rates, so Kenya isn’t unusual in this sense. But factors such as the increase in NCDs, the higher usage of services by insured people, plus the quirk that – unlike other sectors – higher demand does not bring down costs, means companies that offer healthcare to employees are feeling the pressure.
So it’s important to find ways to limit your expenditure while maintaining effective cover for the health needs of your workforce. An attractive health insurance scheme can be a major draw for prospective employees, helping you recruit the best people to work at your company. But of course you don’t want your existing staff to feel devalued, and you certainly don’t want to be taking risks with their health.
The tactics I’ve outlined above will help you bring claims under control given the current situation with healthcare inflation; and improve the chances that next year your health insurance premiums will go down, whatever happens to the medical trend rate.