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National Health Insurance Fund (NHIF): Lessons from Kenya – 55 years on …

17 July 2017Board of Health Funders
Dr Amit Thakker, Chairman of the Africa Healthcare Federation, Kenya.

Dr Amit Thakker, Chairman of the Africa Healthcare Federation, Kenya.

Speaking ahead of the 18th Annual Board of Health Funders (BHF) Conference (16 – 19 July 2017, ICC, Cape Town), themed “Private Sector Embracing Universal Health Coverage”, Dr Amit Thakker has the following insights to share as South Africa prepares for implementation of National Health Insurance (NHI).

In order to understand the history of the National Health Insurance Fund (NHIF) in Kenya, it is important to understand a brief history of Kenya and where we have come from. When Kenya gained its independence in 1964 the Kenyan government had a clear strategy for the growth and prosperity of the country; the three key pillars for these were the reduction of poverty, improvement of education, and better healthcare. To achieve the latter, the Kenyan government introduced the National Health Insurance Fund two years later.

Funding the NHIF in Kenya

Today, the NHIF has grown to include 13 million principal members. However, it still has a very limited pool of funding sources. Payroll tax contributes the largest portion of the funding at 2.3 billion Kenya Shillings a month, an equivalent of USD23 million. Member contributions from the formal sector accounts for 80% of the monthly premiums.

The other source of funding is accumulated by voluntary contributions from the slowly growing informal sector; however, its pace is slower than what was envisaged. The informal sector contributes about 20% of the monthly revenue.

The Health Insurance Subsidy Program (HISP) model is a pilot programme initiated by the government of Kenya to study the effects of the provision of health insurance to the vulnerable population of Kenya. This stemmed from the need to address the challenges of poverty caused by out of pocket healthcare payments by the lower-income population that is not covered by insurance mechanisms. The success of this pilot programme will enable the government to scale it up to the low-income quintile throughout Kenya.

The World Bank also forms a part of the funding model, contributing healthcare coverage for 50,000 households in rural and remote communities. This contribution comprises 100% of the fund. However, the subsidy will be phased out in three years’ time and there are discussions with the Kenyan treasury to assist in absorbing the cost of insuring these households once the World Bank subsidy has been phased out.


Although this programme has a very high potential, the overall performance of the fund has had mixed reviews due to reported inefficiencies. Several aspects for improvement have been identified, such as the optimisation of efficiency in running the fund, reduction in administrative costs, and improvements to the benefits package.

Over the last 10 years, continuous reforms have been implemented to make the NHIF more responsive to the needs of the citizens, and to strengthen the fund’s governance, accountability, and transparency. The National Health Insurance Fund Act is still undergoing reforms to address these in-house challenges.

Lessons learnt

Our biggest learnings have been that in the first 45 years of the NHIF there was minimal participation from the private sector and there was no pressure for it to become involved. However, about 10 years ago when opportunities for the private sector in Kenya began unfolding, private sector participation with the NHIF subsequently increased. There was also a greater push for the private sector to participate, especially in the governance of the fund at Board member level, and in leveraging private sector efficiencies to improve the operations of the fund. Furthermore, the private sector has contributed towards enhancing the claims management system, providing ICT tools for member identification and for the collection of premiums, and providing risk protection in claims.

Kenya’s NHIF started with an in-patient and in-patient benefits-only focus and it continued this way for the first 45 years. Primary healthcare and outpatient benefits, which is a more complex and costly model, has been introduced only recently. To accommodate these new benefits, the government increased contributions from the formal sector and engaged other healthcare providers to the model. In-patient benefits are on a fee for service basis, and out-patient benefits for the providers are fully capitated.

As in many countries, one of the challenges of this scheme is the mandatory payroll contribution. The Kenyan government finds itself in an extremely difficult position to overcome this challenge, as when the payroll tax was introduced, it was perceived as a legislated monopoly. However, the argument is that such tax is necessary in terms of risk-pooling.


The move towards national health cover or universal health coverage should not exclude the private sector but rather should look towards creating synergy through effective models wherein both the public and private sectors can co-exist with shared benefits as well as risks.

It is therefore important for any country that is going to pursue universal health coverage to establish social health protection models through legislation; models that will provide additional choices to its citizens so that they can subscribe to a plan of their choice. Likewise, if a member already belongs to a medical aid scheme, he or she does not need to belong to the NHIF.

The NHIF cannot be a silver bullet for health issues. Its vision needs to be very clear from the onset, and should prioritise the provision of healthcare to the poor and most vulnerable groups. Many funds erroneously aim to capture funds from those who already belong to existing schemes, with the idea of going from the top to the bottom of the socio-economic structure. Africa needs the opposite approach while progressing towards universal health coverage.

Key learnings for South Africa

The private health sector of South Africa has already established efficient health systems. We must appreciate the foundations that have been built over years and the work done by the private sector rather than destabilising the efforts that have been made.

It is very important for a national healthcare insurance model to primarily capture the population that is in dire need of the cover, rather than using the approach to capture the entire population, thereby destabilising the entire system, including the work that has already been established. Government employees and their families constitute possibly the largest proportion of the population for the NHI to capture. Thereafter, governments can also potentially identify some smaller government schemes that can be embedded in the NHI. However, it is important to look at a risk equalising model.

55 years on …

The impact of the NHIF in Kenya has been very weak, even after 55 years. One of the pressing issues here is that it is still a “member-only fund” – if you are not a member, you simply cannot access the benefits. The fund continues to grapple with inefficiencies and a lack of accountability, and this is an area where the private sector can make a positive contribution.

While Kenya’s mortality rates have decreased, this unfortunately cannot be attributed to the NHIF. Primary healthcare has played an important role in reducing overall healthcare costs, as ailments that are treated in their initial stages have reduced costs of treatment over time. As they say, prevention is better than cure; the provision of primary healthcare has helped reduce the disease burden.

The Kenyan NHIF’s vision is to overhaul its governance structure and model in order for it to be responsive and effective in the long term. It is of utmost importance to increase the member base and have a sustainable pool of funding from the government. In addition, there needs to be a substantial resource mobilisation strategy to cover the large portion of the population that remains without cover.

If properly regulated and managed responsibly, the NHIF can play a significant role in taking care of the healthcare needs of a larger target population in any country. However, if the NHIF is designed to exclude the private sector, it is more likely to cause malfunctions in the health systems. A poorly designed and non-inclusive NHIF is worse than not having one at all.

For more information on the 18th Annual BHF Conference, please visit . Themed, private sector embracing universal health coverage, the 18th Annual BHF Conference will be held at the International Convention Centre in Cape Town, South Africa from 16 – 19 July 2017.

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