A newly introduced health insurance cover is forcing a rethink of premiums charged for medical insurance in Kenya, as more players seek to extend the intake below the traditional upper middle class bracket.
The cover launched jointly by the National Health Insurance Fund (NHIF) and the Co-operative Insurance Company (CIC) has been structured for about 100,000 households that are members of the Kenya Women Finance Trust (KWFT), a specialised micro finance organisation.
The cover is priced at Sh10 per day or Sh3,600 per year and underwrites all in-patient expenses for a member's entire family with no exclusion clauses for chronic illnesses and maternity. Surgery costs above Sh15,000 are also covered. The only restrictions are that the expenses be incurred in appointed private, public and mission hospitals for up to 180 days.
The premiums are seen as affordable to the target group, whose small businesses earn about Sh150 per day and who service loans from KWFT starting at Sh20,000. NHIF runs an alternative scheme at premiums of between Sh30 and Sh230 per month under which 1.8 million Kenyans fall. Proponents of the KWFT scheme say its strength lies giving the woman the opportunity to tackle the family health needs.
"It is a major empowerment tool for women. They will have control over their health spending," said Dr Jennifer Riria, the chief executive of KWFT.
Most group health care premiums covering up to four members of a family average between Sh750 and Sh1,000 per month. They cover people earning above Sh30,000 per month, a group that falls under the lower-middle and middle income groups.
The most recent product in this segment offering inpatient cover with inbuilt maternity, chronic illness and HIV benefits like the KWFT one was launched by AAR. It is offering a monthly premiums ranging from Sh960 for children and Sh2,545 for those in their 30s for a cover of up to one million shillings.
Unlimited inpatient cover ranges from Sh1,085 for children, Sh1,600 for those in their 30s and Sh2,335 for those in the 45-49 year age bracket.
David Rono, CIC's general manager for Life and Medical insurance, said that products targeted at low income earners need to be taken en mass to be profitable. This way, he said, premiums can fall to Sh2,500 per year.
Actuaries say insurers structure premiums based on the number of times a targeted group makes hospital visits. A consultants research recently found that the poorest of the poor category makes 16 hospital visits every year but use Sh1,637 every year to pay for their health care services.
The "rich" make the lowest number of hospital visits averaging 9.6 and use Sh2,704 on average per visit. In between the two groups are the "lower middle" income group who visit 14 times and pay Sh3,565 per visit. The "middle income" make 10.4 visits and pay Sh3,073 each time, while the "second rich" makes 10 visits and pays Sh3,635 for each.
The study was being done to inform government plans to launch a National Social Health Insurance Fund (NSHIF) which would have imposed a social tax on the employed in order to provide universal health care to all Kenyans.
Less than 100,000 people are covered by micro health insurers compared to Namibia where it accounts for between 20 and 30 per cent of health care expenditure.
But the KWFT model will need to learn from the weaknesses of a similar arrangement started in 2005 through a trio partnership involving K-Rep Bank, AAR Health Services and the UK's Department for International Development also known as DFID.