From NHIF to SHIF: The challenges and controversies

The Kenya Kwanza administration is set to transition millions of citizens from the current National Health Insurance Fund (NHIF) to the Social Health Insurance Fund (SHIF) this month.

This transition comes after a green light from the High Court, paving the way for new, higher mandatory contributions toward the new health insurance scheme for workers. However, the shift is not without its challenges and controversies that will pile more pressure on already burdened Kenyans.

Starting in February, Kenyans will be required to contribute to SHIF, with the charge capped at 2.75 percent of one’s gross monthly income.

Unlike the NHIF, the SHIF aims to tackle the longstanding issue of anti-selection, where individuals would become active contributors only before scheduled medical needs, such as surgeries, and then drop off from regular contributions. The goal is to make citizens active contributors throughout the year, ensuring better coverage.

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Challenges of lump sum payments

While the shift aims to address anti-selection, it introduces a new challenge by requiring non-salaried individuals to make one lump sum payment based on 2.75 percent of their annual gross income.

This places a financial burden on citizens, especially considering the economic challenges, high living costs, and inflation faced by Kenyans in recent years.

Realizing the financial strain on non-salaried individuals, the government is collaborating with the Ministry of Cooperatives and MSMEs to provide loans to cover the mandatory one-off SHIF contributions.

The interest rates for these loans are yet to be determined, but they are intended to cover individuals’ contributions for the entire year.

The SHIF is designed to cover primary health care, emergency health services, and chronic and critical illnesses. The government aims to ensure a lower cost of healthcare, asserting that many will have access to affordable healthcare through the new scheme.

Additionally, the Kenya Kwanza administration promises to lower contributions from Kes500 to Kes300 per month for low-income earners and non-salaried Kenyans.

Not everyone is welcoming the transition with open arms. The Kenya Medical Practitioners, Pharmacists, and Dentists’ Union Secretary General, Dr. Davji Atellah, criticizes the new scheme as an “outright exploitation of workers.” He argues that the 2.75 percent deduction from the gross salary is, in essence, a tax and calls it exploitative.

As Kenya enters this new phase of healthcare financing, citizens and stakeholders await the impact of the SHIF on their earnings and the overall healthcare landscape. The transition, though aimed at addressing existing challenges, brings with it a mix of optimism, concerns, and the need for careful implementation to ensure the success of this ambitious health insurance initiative.

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