Can sh15,000 insurance fee fix Uganda’s healthcare?
Ernest Magezi Barusya, an actuarial expert and chief executive officer of Kenbright Advisory, advises further scrutiny of the numbers being proposed.
Experts caution that if the scheme is not executed meticulously, it may not serve the average Ugandan.
NewVision Reporter
@NewVision
_______________________ Aceng Jane Ruth Ocero, Woman MP Lira City (nrm) Bukonte- Locals adopt health care insurance scheme for better services3
Uganda has witnessed significant advancements in its healthcare sector. However, most of the population lacks access to quality primary health care.
To address this, the Government has proposed the National Health Insurance Scheme (NHIS), requiring Ugandans to contribute sh15,000 per individual to ensure comprehensive healthcare coverage.
Health minister Dr Jane Ruth Aceng has previously outlined the contribution plan, emphasizing that families will contribute sh15,000 per household member, pending Cabinet approval of the Bill.
Experts caution that if the scheme is not executed meticulously, it may not serve the average Ugandan.
Ernest Magezi Barusya, an actuarial expert and chief executive officer of Kenbright Advisory, advises further scrutiny of the numbers being proposed.
The demographic living below the poverty line will contribute sh15,000 per year, while individuals in businesses such as Boda-boda riders and shopkeepers, will be required to pay sh15,000 per month. The higher income earners will contribute sh1.2m annually.
Drawing on Uganda's private health insurance market, Barusya highlighted escalating healthcare costs. He said actuarial studies reveal that current private health insurance claims could necessitate sh1.2m per policyholder, covering outpatient, dental, optical, and inpatient services annually.
Barusya pointed out that with a sh15,000 monthly collection, the government may only be able to cover 15% of an individual's medical expenses, leaving the question of whether the government is willing and able to sustainably cover this cost.
"The ministry should lay down all its facts about what they will do within the sh15,000 and for what." Current indications suggest that the proposed premium might not adequately address both short-term and long-term liabilities of the NHIS.
He noted that at the moment, the government faces a critical challenge in ensuring the scheme's viability and effectiveness in transforming Uganda's primary healthcare landscape.
However, he also acknowledged the potential of the NHIS as a starting point. At sh15, 000 per year, he suggested that while the coverage might be limited, it could encompass critical aspects such as a decent funeral (sh2.5m), accident hospitalization (sh2.5m), or maternity cover (sh350, 000) for every Ugandan. However, he also emphasized the challenge of offering comprehensive outpatient or illness hospitalization coverage at this contribution level.
Jonan Kisakye, the chief executive officer of the Uganda Insurers Association, raised valid questions about determining an adequate premium. He said the absence of a detailed actuarial report and a comprehensive list of benefits leaves uncertainties about what sh180, 000 per year can truly afford in terms of healthcare services. Kisakye also queried the affordability of this amount for a significant portion of the population.
“I have not seen an actuarial report and the list of benefits is not detailed enough. Additionally, what is adequate healthcare? What sort of medical services or benefits can sh180,000 per year give one access to? And how many people out of the current population can comfortably pay that amount?” Kisakye asked.
Musa Sebuufu, the President of the Actuarial Association of Uganda, expressed reservations about the lack of consultation with his association regarding the NHIS. While acknowledging the scheme's potential to cover those currently excluded from formal insurance, he stressed the need for clarity on the benefits within the sh15,000 cover. Sebuufu highlighted the importance of affordability for the underprivileged and underscored the positive impact of a larger pool of beneficiaries.
“The scheme needs to ensure that whichever amount is zeroed on, it is low enough to be affordable for the underprivileged. The issue is that benefits within the sh15,000 cover are not stated. But the fact is that the bigger the pool, the better,” he said.
But, as the debate continues, key questions linger: Can sh15,000 per month address the healthcare needs of Ugandans? Will the NHIS evolve to provide more extensive coverage as the economy grows? Nevertheless, it should be noted that the success of the scheme may hinge on transparent communication, continuous evaluation, and a commitment to adapting to the changing healthcare landscape in Uganda.
Sarah Byakika, a commissioner from the Ministry of Health, who has been actively involved in the technical consultations on the NHIS emphasized that the sh15, 000 annual contribution is tailored for the informal sector, encompassing approximately 20% of the country's population.
Byakika underscored that this structure aims to address the diverse economic capacities within the population and the scheme will supplement what is already available in the health service delivery.
“The Government cannot provide the entire health services package with just sh15,000. The sh15,000 can only get you a package of services within this range of cost.”
Byakika defended the derivation of the contribution amount, citing an actuarial study conducted in collaboration with the Insurance Regulatory Authority.
Addressing doubts regarding the state of health infrastructure and medical resources, Byakika asserted that the current challenge lies in underutilized medical professionals rather than insufficient infrastructure. She affirmed that the NHIS's success will depend on the efficient utilisation of existing resources.
Contributions to the fund, double taxation fears
Regarding contributions to the fund, Byakika explained that the scheme proposes monthly salary deductions and employer contributions for wage or salaried members. Self-employed individuals will make annual contributions, with government subsidies covering premiums for the vulnerable and indigent. Dependents under 18 are slated to receive coverage for free.
Byakika clarified that the government's intervention through the NHIS aims to alleviate the strain on the existing healthcare system fuelled by resource constraints. While acknowledging concerns about double taxation, she emphasized that the taxes collected currently support various sectors, necessitating a targeted healthcare funding approach.
“The taxes people are paying now is what the Government is using to offer health care services. But remember revenue from taxes is scattered across other sectors. So, currently, the government is proving what it can afford due to resource constraints,” explained Byakika.
It should be noted that as Uganda navigates this healthcare frontier, the debate over the sh15,000 contribution persists, underscoring the need for a comprehensive and inclusive solution to bridge the gaps in primary healthcare access.
Unveiling the financing landscape
The financing strategy for the NHIS reveals a varied landscape, aiming to encompass different segments of the population. Formal sector employees, both public and private, are set to contribute 4% of their monthly salary, with employers chipping in 1% of the employee's monthly earnings. Pensioners, on the other hand, will contribute 1% of their monthly pension payment.
For the informal sector, a flat contribution of sh180, 000 per annum is proposed, covering the individual and their dependents. Indigents, falling below the poverty line, will be enrolled at a rate of 10% annually, depending on the reserves generated or subsidies available.
Byakika emphasized the NHIS's core principle of pooling resources to ensure inclusivity. She envisions a system where the affluent subsidize the less privileged, the healthy support the sick, and the young contribute towards the care of the elderly. She argued that this solidarity through risk pooling will allow the NHIS to benefit everyone, considering variations in health needs and frequency.
Actuarial expert Barusya echoed this sentiment to an extent but introduced a critical perspective. While acknowledging the importance of risk pooling, he emphasized the need for meticulous actuarial benefit cost mapping.
He pointed out that global statistics suggest an average of five outpatient visits per annum for every 100 covered individuals, and about 20% may require inpatient services. He argued for a thorough assessment of the severity and frequency of care to align the proposed financing mechanisms with the true level of contribution needed for sustainability.
But Barusya's concern is underscored by the apparent mismatch between proposed financing mechanisms and the expected benefit offerings. He, therefore, recommended a comprehensive actuarial analysis to ascertain the true cost implications and ensure the scheme's long-term viability.
Health insurance penetration
Uganda's health insurance scenario remains largely uncharted for the majority. According to the Industrial Actuarial Study by the Uganda Insurers’ Association, as of 2022, less than 1% of the population—approximately 400,000 individuals out of 47 million Ugandans—were covered by private health insurance providers. Furthermore, over 97% of these individuals have coverage due to employer sponsorship, leaving less than 10,000 people who personally pay for their health insurance.
This lack of widespread appreciation for insurance underscores the need for extensive awareness campaigns to alter perceptions. Additionally, the public's limited understanding of the insurance industry contributes to Uganda's notably low insurance penetration levels within the East African Community.
Viability of offering health insurance
The financial intricacies of health insurance in Uganda reveal a delicate balance between affordability and sustainability. According to an Industrial Report from the Insurance Regulatory Authority (IRA), in 2022, Ugandans paid approximately sh321 billion to licensed private health insurance providers. This figure was expected to grow by at least 15% by the close of 2023. However, over 98% of these collections were allocated to paying healthcare claims, resulting in insurers facing losses of sh94 billion in 2022 alone.
Actuarial experts emphasize that these losses are projected to reach sh175b within four years. This financial reality raises questions about the sustainability of the proposed NHIS. As the government takes steps to implement this scheme, experts suggest learning from the private insurance experience to avoid potential pitfalls.
Inadequate health infrastructure
The NHIS's success hinges not only on financial viability but also on the adequacy of Uganda's healthcare infrastructure. Emmanuel Sanyu Safali, the chief executive officer at Promise Esaf Insurance Promoters Limited, highlighted the crucial importance of sufficient healthcare facilities, medical supplies, and medical workers.
Safali drew attention to the gaps exposed during the COVID-19 pandemic, revealing deficiencies in Uganda's medical system. He emphasized that while the NHIS is a positive step, it must align with efforts to enhance healthcare infrastructure. He recounted a personal experience where a lack of basic medical supplies in government facilities once posed a serious threat to his life.
“On the night of March 8, 2020, I suffered an attack from robbers. I was operated and two blood clots were removed. I spent a month in the Hospital and the treatment cost me about sh30million. If I did not have insurance cover, I would have died. During the time I was seeking emergency medical attention after the attack, the government facilities I was rushed to, lacked the necessary basic medical supplies like gloves. So, the scheme would work, but the question is how the government intends to ensure basic medical supplies are available in health facilities bearing in mind the current tight budget constraints the country is facing,” he said.
He asked: Can the NHIS thrive in an environment where healthcare resources are stretched thin, especially at the grassroots level? Safali's concerns reflect the need for comprehensive strategies to fortify Uganda's healthcare system before embarking on the ambitious journey of the NHIS.
Insurance sector performance
The insurance sector in Uganda has seen a notable increase in premiums, rising from sh1.44 trillion at the close of 2022 to a projected sh1.64 trillion by the end of 2023, representing a remarkable 15% growth.
The medical insurance business is expected to generate sh373 billion by the close of 2023, demonstrating a 16% growth from sh321 billion in 2022 and constituting approximately 22.8% of the total projected premiums for 2023.
A long-awaited initiative
The NHIS was initially slated to commence in 2017, but the plan has been delayed. The journey began in 2002 when Makerere University Public Health Institute (MakSPH) and Harvard University School of Public Health conducted a feasibility assessment for social health insurance in Uganda. Subsequent drafts in 2012, targeting civil servants, and 2014, including formal public and private employees as well as indigents, have evolved into the current draft, aiming to establish the NHIS for all residents in Uganda.
As Uganda stands at the brink of implementing this crucial healthcare initiative, stakeholders are optimistic about the positive impact it will have on the nation's health sector, driving progress towards comprehensive and accessible healthcare for all Ugandans.
The NHIS is poised to be a beacon of change, fostering collaboration between public and private entities to create a healthier and more prosperous Uganda.