CS Nakumicha explains how they arrived at 2.75 deductions for SHIF.

Health CS Susan Nakhumicha clarified the criteria for determining the maximum contribution to the Social Health Insurance Fund (SHIF) at 2.75% under the new healthcare funding plan.

This replaces the National Health Insurance Fund (NHIF), making it mandatory for Kenyans to contribute 2.75 per cent of their gross salary to the SHIF.

During an interview on Citizen TV on Wednesday, Nakhumicha explained that the decision was reached after actuaries from both the Ministry of Health and NHIF conducted an analysis, revealing disparities in contributions from different income groups.

Actuaries, defined as individuals calculating risk for insurance companies and pension funds, played a crucial role in this assessment.

Nakhumicha highlighted that the analysis demonstrated that individuals with lower incomes were contributing a higher percentage to the fund, while those with higher incomes were contributing a minimal 0.01 per cent.

“We examined the baseline of the existing NHIF, looking at the payment ranges. Those earning Sh10,000 and below were paying up to 5 per cent of their income to NHIF,” Nakhumicha stated.

The CS pointed out that even the highest earner, the President, pays only Sh1,700, which constitutes 0.01 per cent of his income, emphasizing the disadvantage to low-income individuals.

To address this imbalance, Nakhumicha explained that an average was calculated, resulting in the 2.75 per cent figure. This calculation considered the costs of healthcare at primary, secondary, and tertiary levels.

According to the CS, the costing plan indicated the need for Sh80 billion for primary-level healthcare, including managing Community Health Promoters. Additionally, Sh130 billion and Sh46 billion were allocated for secondary and tertiary levels, respectively.

“Based on that costing and after actuarial calculations, we arrived at 2.75 per cent of income. If every Kenyan could pay that, we should be able to take care of the entire healthcare system,” she concluded.

For more news updates, tune in to NRG Radio or download the NRG Play App on your phone