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NHIF Faces a Looming Cash Crisis

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The National Health Insurance Fund (NHIF) faces a looming cash crisis as civil servants have started seeking alternative medical insurance.

In December, Treasury CS Ukur Yattani directed NHIF to adhere to provisions of Section 19 of Insurance Act. The provision provides that only persons registered under the Act have authority to carry out insurance business in Kenya.

In this case, NHIF as currently consituted does not have the mandate the carry on insurance business. According to Yattani, NHIF should stick to its core mandate of collecting contributions from members in formal, informal, and social insurance schemes.

Therefore, NHIF risks losing police, civil servants and parastatal employees unless it abides by the provisions of section 19. There is a possibility of locking out 133,000 civil servants after the expiry of health cover in June this year.

NHIF collects Ksh5 billion premiums from the police medical insurance and a similar amount from civil servants. Moreover, the insurer gets Ksh1.9 billion annually from 40 parastatals and 15 state-controlled firms.

Already, the Interior ministry is searching for a private insurer to cover 131,151 police and prison officers.

NHIF will be under the surveillance of Insurance Reguratory Authority as per the provisions of Section 19 of the law. IRA monitors service providers for financial soundness and ability to honour claims.

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