Giant Hole at The Root of NHIF Crisis

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A photo showing National the Hospital Insurance Fund (NHIF) headquarters in Nairobi.
The National Hospital Insurance Fund risks collapse in two years if the healthcare giant continues operating as it has been doing.

A report by the Health Financing Reform Expert Panel indicated that the revenues of the fund need to increase or the fund will be unable to continue offering services in the next two years.

The report highlighted that the administrative costs of the fund were too high, the staff costs accounting for 54% in the 2017/2018 year.

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National Hospital Insurance Fund (NHIF) headquarters in Nairobi.

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Recommendations from the report called for the fund to move away from voluntary contributions to relying on taxation.

The fund has however chosen to cut down on its spending so as to reduce its deficits.

In line with this, it is set to reduce its administrative costs that are at the heart of its financial crisis.

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NHIF Board Vice-Chairman Roba Duba, as per a Nation report on Tuesday 18, 2020, implied that the mammoth fund would be restructuring its staff to slow down the bleeding of funds.

“In line with the mandate of NHIF as a strategic purchaser of Universal Health Coverage benefits package; the board is realigning the staff based on skills match.”

As of 2018, the fund spent 8.3 billion of its collected Ksh. 45 billion on administrative costs alone.

The fund has also been under increasing scrutiny as its spending on advertising raised multiple red flags with the company spending 753 million on advertising. A figure it intends to bring down to Ksh. 100 million.

An Ipsos 2019 Advertising Industry survey showed that Safaricom spent 625 million on advertising in 2019 for which the company registered 63.3 billion in profits.

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<!–[if IE 9]><![endif]–>President Uhuru Kenyatta delivering the New Year message on December 31, 2019.

President Uhuru Kenyatta delivering the New Year message on December 31, 2019.

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The new direction the fund is taking may in part be influenced by President Uhuru’s orders directing that the new rules be suspended.

Some of the rules that the fund has proposed to cover its bases include: requiring holders of the insurance cover to pay a year’s contributiion in advance and that voluntary members of the scheme wait three months after registration to access any benedfits.

The rules were to cover the funding gaps that the corporation had been undergoing.

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