30 August 2021 by , and Employment Law Alert

Universal health care coverage and compulsory registration

Parliament adopted the National Hospital Insurance Fund (Amendment) Bill 2021 (Bill), which was gazetted on 11 May 2021. The principal object of the Bill is to enhance the mandate and capacity of the National Hospital Insurance Fund (NHIF) to facilitate and deliver universal health care coverage.

The Bill proposes that NHIF membership be ranked equal to other state services and that a person without proof of NHIF registration be denied government services. Additionally, the Bill seeks to impose liability on an employer to make a matching contribution to an employee’s fund, and it further proposes that NHIF be mandatory for all Kenyan residents over the age of 18.

Currently, the law only requires employers to deduct and pay a worker’s contribution from their salary, based on the worker’s pay grade. Therefore, an employer is not required to contribute from its own account. For example, an employer who pays a worker Ksh100,000 is currently required to deduct Ksh1,700 out of the worker’s salary every month. However, once the Bill is passed, the employer in this example would be required to match the Ksh1,700 and pay in a total of Ksh3,400 for that worker. This means that an employer who hires 10 workers on that salary will now be liable to pay a total of Ksh17,000 every month, or Ksh204,000 every year, from the employer’s own account.

In sum, once the Bill is passed, employers will be required to match each worker’s contribution; and perhaps continue paying for private medical insurance, should NHIF coverage be insufficient to meet internal standards of health care provision for workers.

Fiercely contested

The Bill has been fiercely contested, as aggrieved employers have petitioned Parliament over the proposals. The parliamentary committee for health has also rejected the contents of the Bill. In a parliamentary committee report it was reasoned that if the Bill were to be enacted, the amendments would hurt the wage bill and limit an employer’s ability to create jobs, in an already challenging pandemic economy. The report further rejected the mandatory registration requirement, stating that it was “not feasible”.

In 2018, the proposed amendments were piloted and launched in four counties as part of the Government’s Big Four agenda. Since the launch, the President has appealed to lawmakers to pass the amendments, maintaining that it offers the best chance for the government to provide affordable health care for all. It is key to note that the Big Four agenda was intended to be achieved by 2022, which may explain the government’s push towards swift implementation.

The Bill is intended to make health care more accessible and less of a private good across Kenya. However, as parliamentarians highlighted, the cost of this access is set to fall heavily on Kenyan employers. We foresee employers opting out of private medical health care schemes and choosing to only offer their workers NHIF cover, in order to mitigate the cost of the proposed amendments. It is, however, questionable whether NHIF will provide the same standard of health care as private medical insurers.

Employers need to be aware of the proposed changes and prepare to comply with them should Parliament decide to enact the Bill. However, the Bill must still go through the Kenyan legislative process, which involves a first, second and third reading in Parliament, followed by presidential assent and enactment. At present, the Bill has been tabled before Parliament for a second reading to discuss the health committee’s recommendations.

We are keeping a keen eye on the Bill and will regularly update you on any developments.  

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