Kenya: Healthcare reforms propose mandatory employer contributions

Employer Action Code: Monitor

The National Hospital Insurance Fund (Amendment) Bill, 2021 includes a variety of enhancements to the national healthcare system (NHIF) that aim to broaden its mandate and capacity with the overall goal of introducing universal healthcare coverage for all residents. The most noteworthy changes include mandatory NHIF participation for all residents age 18 and above and the introduction of employer contributions (currently only employees are required to contribute to healthcare). The NHIF’s goal is to increase the number of contributing members from around seven million in 2018 to 19 million in 2022, significantly increasing funding (inclusive of employer contributions). The bill was approved by the lower house of Parliament at the end of September 2021 and is currently with the Senate.

Key details

From an employer perspective, the main proposed changes to the NHIF include the following:

• All employees age 18 and over would be required to be registered with the NHIF. Currently, only employed individuals earning 1,000 Kenyan shillings (Ksh) or more per month are required to participate and contribute; participation for other individuals (such as the self-employed) is voluntary.
• Employer contributions to the NHIF would match those paid by employees. Employee contribution amounts vary by income, currently ranging from Ksh150 (on monthly earning up to Ksh5,999) to Ksh1,700 (on monthly earnings of Ksh100,000 or more).
• For individuals with private health insurance (PHI), NHIF would be secondary for insurance purposes. PHI policies would be the primary insurer, with NHIF coverage applying on amounts in excess of what PHI pays (up to defined limits).

Employer implications

If enacted, the reforms would have a significant impact on funding for the NHIF and may affect the market for PHI. Among companies surveyed by Willis Towers Watson, virtually all provide PHI, covering both major and minor medical care for employees and their immediate family members. Making PHI the primary insurer (for those with coverage) can be expected to increase PHI premiums. That said, the PHI market is fairly small and coverage for services is primarily with private service providers unaffiliated with the NHIF, so the impact on PHI premiums may be modest.