April 2018 BusinessDaily; Kenyan employers face additional burden of statutory deductions if Parliament passes a law that will require business owners to match workers’ monthly contributions to the National Hospital Insurance Fund (NHIF).
Doubling the Sh1,700 that top contributors make to the NHIF ranks high on the list of targeted outcomes of the ongoing review of the NHIF Act.
The plan is to have the workers continue paying same amounts and employers matching it.
“The Bill seeks to amend the National Hospital Insurance Fund Act to enable the Fund…to receive an employer’s contribution, matching the employee’s contribution,” the proposed law that was tabled in Parliament last week says.
Having businesses pay for yet another medical scheme for workers — in addition to the private health insurance they already buy their employees — is expected to face stiff opposition from employers, who see it as raising the cost of doing business in Kenya.
The proposal comes barely three years after the NHIF raised workers contributions from Sh320 to a graduated scale of between Sh500 and Sh1,700 per month based on each worker’s monthly pay. The higher fees came with the introduction of outpatient cover for contributors and enhanced benefits for specialised treatment such as cancer and kidney dialysis.
If the Bill becomes law, it will be a double whammy for companies, who are also facing the prospect of being forced to finance part of their workers’ home buying plans.
The State Department for Housing has prepared a set of regulations that will see formal sector workers start contributing five per cent of their monthly income towards a proposed Housing Fund, with employers making equal contribution to the scheme.
The Federation of Kenya Employers (FKE), the employers lobby, has already termed the housing proposal highly burdensome and one with the potential of eroding the country’s competitiveness as a manufacturing hub.
“The number and level of statutory contributions made by employers is already high,” said Jacqueline Mugo, the FKE executive director.
Private sector employers currently match the Sh200 monthly contribution that their employees make to the National Social Security Fund (NSSF) for a total of Sh400.
If established, the Housing Fund will be the third statutory fund in Kenya, after the NSSF and the NHIF.
NHIF chief executive Geoffrey Mwangi did not respond to queries on what has necessitated the proposed doubling of the monthly contributions yet the fund has in recent years been running huge surpluses.
In the six months to December, for instance, the NHIF collected Sh23.6 billion from the seven million members and paid out Sh17.3 billion in claims. Operational expenses consumed Sh3.2 billion, leaving the fund with a Sh3.1 billion half-year surplus.
The latest proposal is contained in the Statute Law (Miscellaneous) Amendment Bill 2018 sponsored by National Assembly Majority Leader Aden Duale. It was tabled in Parliament on Thursday evening.
The government is using the same Bill to oust FKE, the Central Organisation of Trade Unions (Cotu) and the teachers unions from the NHIF board, opening yet another battlefront with the workers and employers.
The ouster will see the removal of five directors that represent FKE, teachers union, Cotu, Kenya Medical Association and faith-based organisations and their replacement with appointees of the Health Cabinet Secretary — leaving the government firmly in charge of the cash-rich fund that collects more than Sh30 billion annually.
It also gives the Council of Governors a seat on the NHIF board in recognition of the fact that health is a devolved function. If passed, the proposals will expand the NHIF board to 11 seats, including the chairperson appointed by the President and three principal secretaries from the Treasury, Health and Labour.
Insurance brokerage firm AON Minet Kenya said in a recent report that Kenya’s medical inflation stood higher at 12 per cent last year, above the general cost of living measure that averaged eight per cent in 2017.
The study attributed the higher healthcare inflation to a rise in lifestyle diseases and the ever climbing cost of imported medical equipment.
The NHIF scheme, which is open to any Kenyan over the age of 18 with a monthly income of over Sh1,000, has reached national coverage of about 25 million people, including contributors’ dependants.