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Big moves at the NHIF – can Kenya’s revised state health insurance system ease the pain for businesses?

January 8, 2018

The Kenyan government recently announced that there are now 6.5 million principal members registered with the state-run National Hospital Insurance Fund (NHIF), 55% of whom are in formal employment. Given that each principal member is entitled to extend the cover to their dependants, the total number of people covered could now be more than 25 million – around half the population.

From a business point of view, a strong state-funded healthcare insurance system can be a significant benefit, helping to reduce the burden on private healthcare schemes and thus enable employers to provide their employees with their own health cover that is of genuine benefit.

So is Kenya’s reinvigorated NHIF a robust system and, if so, how can businesses make the most of it?

So is Kenya’s reinvigorated NHIF a robust system and, if so, how can businesses make the most of it? 

The changing face of the NHIF

NHIF membership is compulsory for anyone over 18 years-old who is in formal employment and earning more than KES 1,000 per month. However, in 2013, only around 17% of people in Kenya had any form of health insurance cover. Of those, approximately 88% had NHIF cover and just over 9% had private medical insurance, probably in addition to NHIF cover in most cases. By 2015 the total number of people insured had increased to just over 23% of the population, with 5.3 million covered under the NHIF, around 61% of whom were formally employed.

The NHIF, having been slow to evolve since it was established in 1967, has recently gathered momentum, spurred by an international focus on improving health equality. In particular, the United Nations Millennium Development Goals and the Sustainable Development Goal to “ensure healthy lives and promote well-being for all at all ages” have encouraged the government to set clear targets and map out how they might be achieved. One of the key aims set out in Kenya’s Health Sector Strategic Plan (KHSSP) is to provide universal health coverage.

With that in mind, the NHIF has seen a lot of changes since 2013. These have included:

  • A change in management structure to improve efficiency
  • An increase in members’ contributions to bring them into line with rising healthcare costs
  • The addition of outpatient cover
  • Increased maternity benefit limits and a free maternity and newborn care package, Linda Mama, rolled out at public hospitals
  • Providing comprehensive cover for civil servants
  • Announcing a new Chronic Disease Fund to cover treatment for serious ongoing conditions like cancer, kidney failure, diabetes, and heart disease
  • Encouraging informally employed and self-employed people to sign up
  • Accrediting more than 200 additional hospitals, including top private entities such as Aga Khan

When I last wrote about the NHIF, in July 2017, members had to nominate one hospital or health centre for all their outpatient needs. In November, that requirement was lifted, freeing people up to use any accredited facility of their choice. However, new benefit caps were imposed and now each principal member and all their dependants using their cover are only entitled to a maximum of four outpatient visits per year under the NHIF. At the time of writing, how this might affect the situation for people with conditions that need regular outpatient care remains unclear.

There have also been reports of issues with some of the more recently accredited hospitals turning people away because they hadn’t agreed on the capitation levels to allow. Plus, the very fact that the NHIF is now changing so rapidly could undermine public confidence in it; however, any lingering question marks over the efficacy of the NHIF should not deter businesses from exploring its potential to help towards their healthcare costs.

It’s fair to say that most of your workforce probably falls into the compulsory NHIF membership category, and you automatically deduct the relevant contribution from their wages. But are you encouraging your staff to take full advantage of their NHIF cover? And if not, what impact could that be having on your overall health insurance expenditure?

It’s fair to say that most of your workforce probably falls into the compulsory NHIF membership category, and you automatically deduct the relevant contribution from their wages.

How can the NHIF help to cut your company’s health outgoings?

The proportion of healthcare fees covered by the NHIF depends on the level of the facilities members use. Hospitals and clinics are divided into three categories:

Category A – government health facilities

Category B – private and mission facilities

Category C – higher level private hospitals and clinics

Unless your staff are comfortable using Category A hospitals, the NHIF won’t generally cover all their medical expenses. However, it can make a difference to the total amount they claim through your private health insurance when using Category B or C facilities.

Now that some of Nairobi’s top private hospitals are accredited by the NHIF, there’s no excuse for your employees not to use their NHIF coverage to take care of some of their health costs. In fact, the fund will pay out more per night for a stay in a Category C hospital. Insurance providers actually expect beneficiaries to claim on the NHIF as well as on their private medical insurance, and typically take the relevant NHIF rebate off the benefit amount they pay out.

It’s important to communicate the available benefits to your staff in order to maximise the value that they, and your business, gain from the NHIF.

Encourage staff to use the NHIF cover where they can

Ask employees to choose NHIF accredited healthcare providers so your private medical insurance will only need to cover anything not already paid for under the NHIF. Make sure they understand that, while you do provide private health insurance, using it more than necessary could result in your premium increasing to an unsustainable level. You may then be forced to reduce the level of cover you can offer your workforce, so it’s in their interest to use the services responsibly and with caution. 

Dependants: The NHIF covers not just your staff but also their spouse, any children under 18 (or in full-time education up to 25) and any dependant with a disability. In many cases this will be much broader coverage than a company health insurance scheme provides, so it’s in the best interests of your team to be aware of what they and their loved ones are entitled to on the NHIF. 

Chronic diseases: The care required for serious chronic conditions like cancer can be very expensive, potentially even exceeding the maximum annual benefit amount for an individual with private medical insurance cover. So if they fall seriously ill it’s important that your staff make full use of the NHIF Chronic Disease Fund. 

Maternity care: At the other end of the spectrum, maternity care is another area that can be very expensive in Kenya, particularly if women choose to go to one of the better private hospitals. Maternity cover isn’t always included as standard with private medical insurance and, while it is usually available as an optional extra, it will often need to be provided for all beneficiaries or none. The NHIF now pays up to KES 10,000 towards the costs involved in a normal delivery at a Category B or C hospital and up to KES 30,000 for an emergency caesarean.

Help your staff understand how to use the NHIF

Using the NHIF can be complicated, especially during this time of transition, so do keep employees up to date with the latest developments that might affect them and make sure they know they can seek support from your HR team to help them navigate the system. 

Everyone is entitled: Although the NHIF does provide cover for the very poorest people in society, it is not a hardship fund for the deprived. It exists for everyone. Your employees are all paying for it, so it’s important that they know how to make use of it. 

Accredited providers: The most basic and important point to note is that in order to claim on the NHIF, your people will need to use the services of accredited providers. They can see full lists of current inpatient and outpatient providers on the NHIF website. 

Pre-authorisation: It’s also crucial for them to know when they have to get pre-authorisation from NHIF headquarters in order for a procedure to be covered. This may be the case when they need diagnostic services like MRI and CT scans, chemotherapy or radiotherapy for cancer, as well as certain major surgical procedures. 

This may be the case when they need diagnostic services like MRI and CT scans, chemotherapy or radiotherapy for cancer, as well as certain major surgical procedures.

Chronic illness: The government’s position on providing outpatient care for chronic illnesses is yet to be disclosed, following the recent changes, so encourage staff with serious ongoing health conditions to keep in close contact with their healthcare providers so they can be sure to use the full extent of the NHIF cover they are entitled to.

What difference can the NHIF cover really make?

At the moment, the reality is that the NHIF will only partially cover the health needs of your employees. However, by making the most of the provision it will help to lighten the burden on your private health insurance. In the long term, this could contribute towards keeping the premiums you pay manageable.

In its effort to reach the goal of providing universal health coverage, the Kenyan government is putting increasing emphasis on the NHIF, and committed KES 2.3bn in the 2017/18 budget to expand access to affordable healthcare. So while the NHIF is still a work in progress, it is well worth encouraging your staff to make use of it. After all, they’re paying for it.

About the author: Alniz Popat, Founder and Chief Executive Officer

Alniz founded Lifecare 20 years ago in his native country Kenya to address the growing need for individual and corporate health insurance solutions. Soon thereafter Alniz expanded into Dubai, and in recent years he added yet another office with the establishment of Lifecare’s presence in Qatar. As CEO of Lifecare Alniz is responsible for the strategic direction of the business, and it is his drive and passion to help people get the right healthcare through affordable insurance that has resulted in Lifecare’s strong growth over the years. Today Alniz proudly oversees 100 caring and passionate employees who work tirelessly to deliver an excellent service to the 1,200 businesses and 25,000 members who are part of the Lifecare client portfolio. Alniz is a graduate of the University of Western Ontario, Canada in Finance and Economics, and is an active member of the Young Presidents’ Organisation in Kenya, and the World Presidents’ Organisation in the United Arab Emirates.