Who wins in planned National Health Insurance Scheme?

The proposed National health insurance scheme might affect the insurance industry whose major cash cow is medical insurance.
Ms Sheila Afuwa forked out Shs100,000 to treat a chest infection in one of the hospitals in Bugolobi. She runs a mobile money business earning Shs250,000 a month. The treatment cost her close to half her salary for that month.

In 2017, Ms Mariam Mutesi, a 40-year-old woman was detained by UMC Victoria hospital over a Shs23m debt. Diagnosed with pulmonary edema, respiratory failure, heart failure and bronchopneumonia, she and her husband received a bill of Shs6.8m three days after her admission to the hospital.
Many Ugandans suffer the same fate, or even worse.
Last week, Cabinet approved the national health insurance scheme Bill. The Bill, if approved by Parliament, will subject employees in the formal sector to 4 per cent deduction off their monthly salaries while their employers contribute 1 per cent to the health scheme on a monthly basis.

Dr Sarah Byakika, the commissioner planning, financing and policy in the health ministry, told Prosper Magazine that individuals in the informal sector will pay an average Shs100,000 or an amount determined based on the calculated expected income on an annual basis.

“Shs100,000 is average but an assessment will be taken and people will be told to pay based on that,” she said.
Every contributor, she said, shall upon payment of the prescribed contribution, be issued with a card for purposes of identification and verification to access healthcare benefits under the scheme.
However, underprivileged people such as the poor who can hardly earn $1.5 (about Shs5,462.95) a day, people with disability (PWDS), the elderly, orphans, and street children will not pay any fee, but will get insurance cards from the government to access health services.

“They will be determined using an agreed upon criteria that will focus on the socio-economic status of individuals who will be mapped within their areas of residence using standard tools for collecting information about their socio-economic status,” Ms Byakika said.
Pensioners will also contribute 1 per cent of their monthly pension payment.

Feasibility
According to the Uganda Manpower Survey report 2018, the total number of employees in formal establishments grew from an estimated 700,000 in 2010 to 1,000,000 in 2015. The survey projected that more than 410,000 employees will have been added by 2019.
Uganda Bureau of Statistics 2018 abstract shows that the informal sector makes up more than 60 per cent of Uganda’s economy and only 20 per cent in the formal sector.
The figures indicate that the scope of formal employment is low, prompting a query on whether the collections from this segment will have a substantial input to the universal health care service of over 38m Ugandans.

The informal sector, which makes up most of Uganda’s economy, raises traceability concerns.
Ms Byakika told Daily Monitor that they will consider organised communities, especially those in different associations, who will be required to pay the contribution through their respective groups into the scheme.
Those who are not in any associations, she said, will be followed up by local government heads and local councils at the grassroots.
Whereas some people in the informal sector make a lot more money compared to the salaried earners in the formal sector, already, government has challenges of formalising them to increase the tax base.

In fact, a 2019 report by Financial Sector Deepening Uganda, revealed that efforts to increase the formal financial inclusion are strained by the fact that 76 per cent of Ugandan adults are in rural areas, where formal financial institutions lack the incentive to penetrate.
In addition, most adults rely on sources of income that avail them access to small and inconsistent amounts of money.
According to Mr Timothy Mabirizi, an insurance consultant, the proposed Shs100,000 as insurance premium is too low for one to receive quality health care. It would need an average of Shs1m to receive quality health care.

Winners and losers
The biggest winner from the scheme is the indigent or otherwise known as poor person whose medical services are subsidised by contributions from other members of the scheme.
The biggest losers are the insurance companies which will be cut out of the equation.
“Once the law has been enacted, all Ugandans will be required to contribute to the government scheme. The private insurers had failed to take off, since they were covering only few individuals in the formal sector, totaling about 2 per cent. So they had failed to provide health services to all Ugandans,” Ms Byakika said.
Medical insurance remains the biggest bank roller of insurance companies. Uganda currently has about five health membership organisations offering medical insurance and 21 general insurance companies.

Insurance companies have recorded increased gross written premiums in the medical class from Shs33b in 2013 to Shs84.3b in 2017. However, profits have reduced from Shs1.5b in 2013 to Shs929m in 2017 because of increase in claims settled.
Mr Ivan Turyamusiima, the chairman of Insurance Agents Association, says the Bill will affect their business but is a positive move for the country at large as long as proper implementation is done.
“We are going to lose some business. We might find issues in service provision especially if government does not pay the service providers in time. The few who will afford may come back to private medical insurance,” he says.

Quality
In Kenya, concerns of quality of health care with national health insurance come into play. It remains to be seen how universal health care will unfold when the Bill is tabled before Parliament in a few months.

What happens elsewhere?
Uganda’s neighbour to the East, Kenya, had earlier formed and implemented her equivalent to the national health insurance scheme.
According to the World Bank publication, ‘National Hospital Insurance Fund Reforms: Implications and Lessons for Universal Health Coverage,’ Kenya has made a commitment to achieve universal health coverage by 2022.

Kenya in 1966 set up the National Hospital Insurance Fund (NHIF) to provide mandatory health insurance to the formal sector.
While membership in NHIF is mandatory for formal sector workers who pay an income rated monthly contribution through statutory deductions, it is voluntary for informal sector workers, who pay a flat rate contribution directly to the NHIF.
The Fund has since undergone major reforms aimed at increasing informal sector inclusion and increase medical insurance coverage such as the introduction of the Civil Servants Scheme (CSS) for civil servants and the health insurance subsidy for the poor (HISP), among others.

However, the country is still challenged by the big informal sector which forms 83 per cent of Kenya’s employed population with 73 per cent declining to renew membership in NHIF.
The Fund has, however, registered some success especially increase in membership figures.

Employers speak out

Mr Douglas Opio, the executive director Federation of Uganda Employers, says while the intention is good, implementation might drain a lot of administrative costs.
The scheme, which would be under ministry of Health, would also need administrators for the National health Insurance Fund, the account where the monies would be collected.
He believes that medical services are part of social security and as such, should be the mandate of National Social Security Fund (NSSF).

Under NSSF, he says collections of contribution for the scheme would not create additional administration costs since the structures are currently available in addition to the Fund’s presence around the country.
“Health benefits could be within the social security. Through NSSF, the arrangement would be much cheaper, probably employers and workers would make small additional costs and the rest of the money can come from the investments made by NSSF,” he says.

Sitting on the national health insurance scheme task force, he had proposed that three schemes be created.
Social health insurance scheme to cover the civil servants, private commercial health insurance for the formal sector and the community health insurance which would take care of the informal sector.

SENSITISATION IS KEY

Insurance penetration in Uganda is currently at 0.84 per cent.
This is partly because of trust and disregard for insurance, which is considered a luxury and not necessity. Government will have to invest a lot to increase awareness about insurance, a struggle insurers have long been undertaking.
Mr Opio says government will also need to sensitise the public in order to mitigate high cases of sicknesses to ensure sustainable contribution rates.