The Ministry of Health has revealed that out of 19 million registered Kenyans, only 3.3 million actively contribute to the Social Health Insurance Fund (SHIF).
This indicates that merely 17% of those enrolled are making regular payments. This figure aligns with national employment statistics, where the formal sector accounted for an average of 16.7% of total employment between 2019 and 2023, as reported in the 2024 Economic Survey.
The informal sector has consistently represented about 83% of the workforce since the early 2000s. Additionally, data from the Kenya Revenue Authority (KRA) shows that by June 30, 2024, only approximately 8 million out of an estimated 20 million economically active Kenyans had filed tax returns. This includes corporate taxpayers but excludes many households engaged in small-scale farming and pastoral activities not accounted for in the economic survey. Notably, a significant portion of those who filed returns reported no taxable income.
Given these statistics, SHIF faces challenges in expanding its contributor base. Similar to its predecessor, the National Health Insurance Fund (NHIF), SHIF may experience chronic funding shortages unless alternative financing methods are identified. Despite potential increases in individual contributions due to amended laws, the number of active contributors is unlikely to rise significantly, reflecting broader economic patterns.
Ministry officials have highlighted the growth in registration numbers but have not disclosed the amounts collected under the 2.75% levy over the past four months, leading to skepticism among potential voluntary contributors. Utilizing statistical terms like ‘Mean Testing’ does not necessarily translate into increased cash flow for the fund without addressing underlying economic conditions. The fact that only about 17% of individuals and businesses in the formal sector bear the largest tax burden indicates a systemic flaw in the economic structure.
Policymakers aimed to address this systemic issue through stringent laws and additional levies on an already burdened minority. However, the projected annual collection of Ksh. 133 billion may remain unattainable. With heightened public expectations due to political discourse, the fund is likely to face ongoing cash flow challenges.
This situation mirrors other struggling programs, such as the University Funding Model and the Hustler Fund. These initiatives have left university administrators, students, and parents uncertain about the future of higher education financing. Recently, government economic advisor Dr. David Ndii acknowledged that the Hustler Fund was intended as a credit score alignment scheme rather than a loan program, suggesting that the funds allocated may have been a gesture of gratitude to supporters.
The core issue now is determining the future of SHIF and the goal of achieving a functional universal healthcare system. The World Health Organization defines universal health coverage as providing all individuals access to quality health services without financial hardship. Given SHIF’s challenges in enrolling voluntary contributors, the initiative risks collapsing due to funding deficits, potentially becoming another mismanaged agency. Consequently, employees may face additional levies without alleviating the financial strain on vulnerable households, potentially benefiting profiteers and cartels within the healthcare sector.
President Ruto may need to reconsider his approach, as addressing longstanding healthcare issues requires more than hastily implemented policies and laws. A sustainable solution involves restructuring the economy towards greater formality, increasing household incomes, and fostering an environment conducive to job creation.
Additionally, it may be prudent for the President to have his advisors revisit their strategies. Reforming healthcare institutions might be more effective than imposing a 2.75% levy. This could involve suspending the levy, reverting to the previous system, and addressing the systemic issues that plagued NHIF. Such measures would allow time to develop a more sustainable alternative, restore credibility, and facilitate better communication for broader public support. Current weekly briefings appear to mimic past approaches, which may not be suitable for the present context.
In conclusion, policymakers might benefit from reimagining the entire healthcare system. Emphasizing community-level education on healthy lifestyles could reduce the national disease burden. Integrating modern and traditional healthcare practices may offer additional solutions. The focus should not solely be on increasing funding but also on innovative approaches to healthcare delivery. For instance, China’s model integrates healthcare into cultural practices, domestic tourism, and community development, offering both traditional and modern medical options.
By Nairobi