The Restructuring of NHIF Explained: What the Split into 3 Funds Means
President William Ruto has set in motion a plan to repeal the National Health Insurance Fund and replace it with 3 new funds
President Ruto chaired a Cabinet meeting at Kakamega State Lodge on Tuesday, August 29 which approved the setting up of different funds to replace the NHIF which was first established in 1966.
By revoking NHIF and replacing it, President Ruto seeks to attain Universal Health Coverage (UHC) as set out within his plan for a healthier nation espoused under the Bottom Up Economic Transformation Agenda.
According to a communication from the Cabinet Office, the meeting approved the setting up of the following funds to replace NHIF.
- Primary Healthcare Fund
- Social Health Insurance Fund
- Emergency, Chronic and Critical Illness Fund.
The funds will be created after Parliament passes the following bills to pave the way for the paradigm shift in healthcare financing in the country.
1. The Primary Health Care Bill, 2023 – Primary Health Care Bill, 2023. This bill signifies a pivotal shift in Kenya’s healthcare landscape by nurturing the foundation of health at its grassroots. By championing primary health care as the cornerstone of wellness, this legislation acknowledges that proactive measures, preventive care, and health education are indispensable in ensuring a healthier populace.
It establishes the framework for the 100,000 community health promoters to be commissioned by the President in October 2023 & outlines the services they will offer when they visit households. The bill provides for the re-organization of service delivery at the Primary Health Care levels; including dispensaries & health centers, where the government shall cater for these services. – This means Kenyans seeking services at these levels can walk in & walk out without incurring any bill – According to State House Spokesperson Hussein Mohamed
2. The Social Health Insurance Bill, 2023 – The Social Health Insurance Bill, 2023, is a game-changer. Replacing the National Health Insurance Fund, it introduces a comprehensive framework with the Primary Healthcare Fund, the Social Health Insurance Fund, and the Emergency, Chronic, and Critical Illness Fund. This framework ensures all-encompassing coverage, spanning emergencies, chronic ailments, and critical care.
The Social Health Insurance Bill 2023, which establishes the authority that shall replace NHIF. The bill establishes 3 funds:
- A Primary Health Care fund to cater to preventive & promotive primary care services at the community, dispensary, and health center levels;
- A Social Health Insurance fund that shall cover services such as primary referrals, secondary & tertiary services; and
- A Chronic Illness & Emergency fund that provides for chronic illnesses like complications of diabetes, hypertension, cancer management, & emergency treatment, as enshrined in our constitution article 43 (2) which reads: ‘A person shall not be denied emergency medical treatment.’
These funds are to be managed by a Single board & Secretariat, based on the proposed 2.75% deductions on household income from both formal & informal sectors. – State House Spokesperson Hussein Mohamed
3. The Facility Improvement Financing Bill, 2023 – The Facility Improvement Financing Bill, 2023, stands as a testament to Kenya’s dedication to creating a robust and efficient healthcare infrastructure. By facilitating financing mechanisms to upgrade and expand healthcare facilities, this legislation ensures that quality care is within reach for all citizens, no matter their geographical location
4. The Digital Health Bill, 2023 – The Digital Health Bill, 2023, another landmark proposal, aims to bridge existing legal and regulatory gaps within the digital health ecosystem. This forward-thinking legislation acknowledges the critical role of technology in modern healthcare, encompassing m-health, telemedicine, and e-learning. With this bill, Kenya sets a precedent for harnessing technology to not only improve health outcomes but also enhance accessibility to healthcare services, especially in remote areas
“These bills usher in a paradigm in the legal and institutional framework for healthcare in Kenya,” Cabinet noted.
The Digital Health Bill, 2023, will enable the development of standards towards the provision of m-health, telemedicine, and e-learning in healthcare.
“This new architecture is expected to provide a framework for improved health outcomes and financial protection of families in fidelity to the State’s solemn duty to guarantee the health and welfare of all her citizens,” Cabinet dispatch read.
According to State House Spokesperson Hussein Mohamed the three funds result from the reorganization of the pre-existing funds.
“The reorganization of the Sh550 billion that constitutes our total health expenditure, to achieve Universal Health Coverage. The Primary Care Fund will be funded from the Exchequer,” he stated.
Earlier in 2023, Health CS Susan Nakhumicha announced plans to rebrand NHIF to the National Social Health Insurance Fund (NSHIF).
However, with the creation of the Primary Healthcare Fund, Social Health Insurance Fund and the Emergency, Chronic and Critical Illness Fund, the government seems to have abandoned the plan to rebrand NHIF and repeal it completely.
What this Means
President William Ruto’s plan to repeal the National Health Insurance Fund (NHIF) and replace it with three new funds refers to a significant structural change in the healthcare funding system in Kenya. The proposal aims to move towards achieving Universal Health Coverage, a key goal within his broader Bottom Up Economic Transformation Agenda. This ambitious plan involves the phased repeal of the long-standing National Health Insurance Fund (NHIF) and the establishment of distinct institutions that will form the cornerstones of the country’s healthcare coverage system. Through measures outlined in the social health insurance bill of 2023, the government aims to reshape the insurance aspect of the National Hospital Insurance Fund, ultimately running it separately from its previous structure. The new funds, each designed to address specific facets of healthcare financing and delivery, signify a significant shift in the government’s approach to ensuring universal access to quality medical services.
These funds are to be managed by a single board & secretariat, based on the proposed 2.75% deductions on household income from both formal & informal sectors – According to State House Spokesperson Hussein Mohamed
1. Primary Healthcare Fund
Primary Health Care (PHC) is the gateway to attaining Universal Health Coverage (UHC), and in Kenya, the PHC Strategic Framework (2019 – 2024) was developed to support this.
The initiative to invest in PHC services is in line with Kenya’s four key health delivery documents/platforms:
- The Kenya National Health Sector Strategic Plan (KHSSP)
- The UHC Policy
- The Kenya Essential Package for Health (KEPH)
- Kenya Primary Health Care Strategic Framework 2019-2024
The Primary Health Care Network – Primary Health Care Networks (PCNs) are an integral part of PHC and thus form a key building block for scaling up UHC. The PCNs will help achieve universal access to health care by availing person-centered services closer to communities in need and assure quality, continuity and sustainability of healthcare
A PCN is defined as an administrative health region comprising of a primary health care referral facility (hub) and several other primary health care facilities (spokes) established to deliver access to primary health care services for patients, as well as coordinate with other hospitals in order to improve the overall operational efficiency of the network. The PCNs are designed to have a modified ‘hub and spoke’
The modified hub and spoke emphasizes the needs of the population with the community as the entry level to the health system. The hub is expected to be a level 4 facility (sub-county hospital, faith-based or private hospital) and will support the spokes which comprises of levels 2 and 3 facilities and level 1 community health units (CHUs). While in some regions a sub-county may constitute one PCN, some sub-counties in especially geographically vast counties may have more than one hub; hence more PCNs. (Kenya Primary Health Care Network Guidelines) 
The Primary Healthcare fund will be funded directly by the national government through the exchequer as part of the efforts to accelerate UHC.
Parliament will be required to pass the Primary Health Care Bill, 2023 which will provide areas that the government will directly deal with in the provision of healthcare.
The government’s health goal is the attainment of universal health care coverage for key services, including maternal, neonatal and child health services.
2. Social Health Insurance Fund
Social Health Insurance aims to protect all population groups against financial risks due to illness through a monthly premium.
Currently, Kenyans who are not in any formal employment pay Sh500 monthly to access medical services with President William Ruto proposing to slash the amount to Sh300 monthly.
The fund also provides insurance services to other civil servants including the police and the National Youth Service.
Under the new shift once parliament approves the bill, the new fund will particularly focus on social insurance for Kenyans.
The government is also expected to bring on board more state agencies to be insured by the fund as a way of enhancing its capacity.
3. Chronic and Critical Illness Fund
The fund will be dedicated to addressing critical illnesses among the Kenyan population including Cancer.
The President has previously said that cancer treatment is impoverishing households because of the high costs involved.
Currently, households are being forced to seek treatment overseas because of the high costs associated with local treatment.
The current financing model NHIF is blamed for a lack of capacity and efficiency, denying poor Kenyans under the fund timely resources to access treatment.
With this special fund dedicated to the treatment of chronic illness, Kenyans will be able to get a better financing treatment option that will lessen their financial burdens.
At the same time, to enable the establishment of these funds, the Kenyan parliament will have to pass several bills that will put in place a new framework for healthcare in Kenya. These include the Primary Health Care Bill, Social Health Insurance Bill, Facility Improvement Financing Bill, and the Digital Health Bill, the latter of which aims to provide regulatory measures for telemedicine, m-health, and e-learning in healthcare.
According to the Cabinet meeting, these new changes will revamp the previous system and provide better health outcomes with financial protection for families, aligning with the state’s responsibility to guarantee the health and welfare of its citizens. The process will involve the reorganization of the current healthcare expenditure, primarily financed by the Exchequer.
Previously, there were plans to rebrand NHIF to the National Social Health Insurance Fund (NSHIF). However, the government seems to have shifted from this plan and is now aiming for a complete overhaul of the NHIF instead. This represents a significant change in the government’s approach to healthcare financing, moving from a single fund to multiple specialized funds.