NHIF’s Sustainability Will Be Compromised Unless Proposed Rates Are Implemented

A report released by Health Financing Reforms Expert Panel (Hefrep), has said that NHIF is facing a risk in its financial sustainability.

The panel, set up by Health Cabinet Secretary Sicily Kariuki to transform and reposition the NHIF task force, has said that unless the proposed rates President Uhuru Kenyatta halted mid last month are implemented, NHIF will collapse in two years.

Early last month, Kenyans were relieved after President Uhuru Kenyatta decided to suspend the NHIF regulations that tripled costs for new members.

In the suspended regulations, the fund had decreed that new members pay 6,000 shillings and wait for three months before becoming eligible for the cover in contrast with the existing rules.

The report by Hefrep tabled at the National Assembly’s health committee indicates that the current revenues of NHIF might not be rational for them to continue offering services in the next two years.

NHIF Expenditures

Findings by the panel indicate that the fund’s administrative costs were a major contributor to the fund’s inefficiencies.

Here is a breakdown of how the administrative costs are distributed:

• 54 percent recurrent expenditures
• 24 percent Advertising expenses
• 10 percent Medical Payouts
• 12 percent Corruption & Unaccounted for

The fund depends on collecting voluntary premiums from the informal sector and the poor, a strategy that Hefrep wishes to have kicked out and instead adopt tax financing.

“It is clear from the analysis of the NHIF and from international experience that UHC cannot be achieved through a voluntary mechanism. Therefore, the government should allocate funds from general tax revenues to the NHIF to cover the poor and the informal sector, while the formal sector will continue to make mandatory contributions to the NHIF,” the report states.

Various Kenyans have commented on the issue and among them is business and markets analyst, SokoAnalyst, who seems to support the collapse of NHIF:

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