The government of Kenya has made a commitment to reach universal health coverage by the year 2022. Enrolling informal sector workers, who constitute 83% of Kenya’s population, in the National Hospital Insurance Fund (NHIF) is one of main ways in which the goal of universal health coverage will be met.
Since the devolution of the health sector in 2013, county governments have been pursuing various strategies – including subsidies for vulnerable groups such as the poor, the elderly and persons living with disabilities – to increase the proportion of their populations covered by the NHIF. In addition, some counties have set aside funds to enroll individuals with chronic diseases in the NHIF in a bid to protect them from the financial burden incurred by their regular visits to hospitals for inpatient and outpatient treatment and follow-up.
While the intention is good, specifically targeting individuals with chronic diseases to enroll in the NHIF introduces a different problem: adverse selection. There is a high likelihood that chronically ill individuals will use health services, thereby creating a significant burden on the insurance provider if their enrollment is not counter-balanced by the enrollment of low-risk groups into the same insurance pool.
The introduction of group insurance contracts is one strategy for addressing the issue of adverse selection. The Health Sector Programme is currently working with county governments and regional branches of the NHIF in Kisumu, Kwale, Siaya and Vihiga counties to sensitise and enroll organised informal sector groups into the NHIF. Group insurance contracts mitigate against adverse selection by limiting the number of high-risk individuals who enter the risk pool, because the groups are constituted on the basis of occupation or trade, or as savings societies, rather than on the basis of illness.
When counties support the enrollment of informal sector groups in NHIF, they are both advancing their mandate to increase insurance coverage in the county and ensuring the sustainability of the insurer. The result is that all beneficiaries – including chronically ill people – have access to healthcare when they need it, without financial hardship.
The link below provides additional information on the principles of health insurance and proposes mitigation strategies against adverse selection.