Employers in Kenya have opposed proposals in a Bill. Said proposals that will make it compulsory for them to match the monthly contributions of its workers to the National Hospital Insurance Fund (NHIF).
The Federation of Kenya Employers (FKE) has warned that compelling employers to match the contributions to the public health insurer would essentially damage private medical insurance while also forcing firms to carry out further job cuts.
Among the list of proposed changes to the National Hospital Insurance Fund (NHIF) Act that is set to be introduced to Parliament on Wednesday the 7th of July 2021, is the doubling of the 1,700 Kenyan Shillings which major contributors pay to the National Hospital Insurance Fund (NHIF).
According to reports the strategy is to see workers continue to pay the same amounts while employers begin to match same amounts in a structure that is being modeled after the National Social Security Fund (NSSF).
What this means is that employers will end up paying not less than 25 billion Kenyan Shillings to the National Hospital Insurance Fund (NHIF). This will by no small means be a significant financial burden on companies many of which, are still not back to their feet after the severe downtime brought on by the still ongoing Coronavirus pandemic that resulted in worldwide closures of businesses, halting of new hires, as well as major job cuts.
Jacqueline Mugo who is the Chief Executive of the Federation of Kenyan Employers (FKE) made it known while speaking to Parliament that, “This will not only affect the wage bill and sustainability of enterprises but also destroy the capacity of enterprises to create new jobs and sustain the existing jobs.”
Jacqueline Mugo via a memorandum to the National Assembly committee on Health stated that the proposals contained in the National Hospital Insurance Fund (NHIF) (Amendment) Bill, 2021 do not put into consideration the fact that a number of employers currently make medical insurance available for their employees.
At the end of June of 2020, the National Hospital Insurance Fund (NHIF) had a total of 8.898 million members. Of the 8.898 million members, 4.452 million were gotten from the formal sector, with the remaining 4.546 million members coming from the informal sector.
In the financial year which ended in June of 2017 formal workers were able to contribute a total of 24.89 billion Kenyan Shillings to the National Hospital Insurance Fund (NHIF). The most recent detailed financial statement available revealed an indicator that employers will be paying at least 25 billion Kenyan Shillings.
This will potentially make the National Hospital Insurance Fund (NHIF) the richest establishment backed by the Kenyan government with yearly collections of around 100 billion Kenyan Shillings based on its receipts of 60 billion Kenyan Shillings in the year up to June of 2021. According to reports, it paid out 54.3 billion Kenyan Shillings to hospitals as members’ claims.
Jacqueline Mugo while speaking to the Health committee on Wednesday the 30th of June 2021 that majority of the employers in the East African nation of Kenya currently implement private medical insurance schemes for their staff.
The Chief Executive stated via the memorandum that, “Making it mandatory for the employers to match their employees’ contribution will mean that they are paying double for the health insurance. This will not only lead to unnecessary increase in the cost of labour in Kenya, but it will also destroy the private health insurance industry and the competitiveness of Kenya’s business operating environment.”
All employers who make the payment late or after the 9th of each month, will be penalized with a fee of 25 percent of the outstanding payment due. They will in addition, have to pay all medical bills for any and all workers in their establishments who fall sick within the default period.
For all individual contributors who are not able to pay the premiums by the 9th of every month, they will be penalized with a fee of 50 percent.
The Bill which is backed by the Kenyan government states that, “Employer shall be liable to pay the penalty prescribed in subsection (I) and pay the costs incurred by the employee when seeking treatment from a contracted health care provider during the period when the contribution is due.”
The proposal is coming almost six (6) years after the National Hospital Insurance Fund (NHIF) increased the contributions of workers from 320 Kenyan Shillings per month, to a graduated scale of between 500 Kenyan Shillings and 1,700 Kenyan Shillings per month based on their monthly pay.
While speaking to a virtual public participation forum regarding the Bill Jacqueline Mugo revealed that, all employers will be tasked with covering the costs of matching the contributions of their employees.
Employers in Kenya have also rejected a section of the Bill that will require the National Hospital Insurance Fund (NHIF) to only cater for the hospital bills after patients who are under private covers use up the limit(s) set by their private insurers.
Said proposal in the Bill, is a shift from what is the case presently where the National Hospital Insurance Fund (NHIF) caters for the first payment which is usually a small percentage of the overall bill, and leaves the rest of the bill to the private insurers.
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