SHA defends Means Testing Model amid scrutiny over health contributions

The Social Health Authority (SHA) has defended its means testing system used to determine contributions under the Social Health Insurance Fund (SHIF), following concerns raised in a recent report by Africa Uncensored.

In a detailed press statement, the Authority said it welcomes public scrutiny but maintained that the Means Testing Instrument (MTI) is designed to ensure fairness, equity, and sustainability in Kenya’s health financing framework.

“SHA welcomes rigorous public discourse on health financing and is committed to addressing these concerns with transparency and strict adherence to our statutory mandate,” the statement read.

The Authority said the shift to SHA was necessitated by longstanding structural weaknesses in the now-defunct National Health Insurance Fund (NHIF), which it described as inequitable and unsustainable.

According to SHA, the NHIF disproportionately burdened low-income earners while relying heavily on a small segment of formally employed Kenyans to finance healthcare for the entire population.

“It effectively punished low-income households by charging them a disproportionately higher percentage of their earnings,” SHA said, citing examples where informal workers paid up to 5% of their income compared to as little as 0.17% for high-income earners.

Under the new system introduced by the Social Health Insurance Act, 2023, contributions are set at a flat rate of 2.75% of household income, with a minimum monthly payment of Sh300. SHA argues that this model eliminates regressivity and ensures contributions are based strictly on ability to pay.

The Authority noted that 54% of formally employed contributors have already benefited from reduced premiums under the revised structure.

To assess contributions for those in the informal sector, SHA employs Proxy Means Testing (PMT), a globally recognised approach used in countries such as Colombia and Indonesia to identify vulnerable populations for social support.

“PMT is not unique to Kenya; it is a globally recognised best practice for directing healthcare subsidies and social assistance,” the Authority said.

SHA further clarified that the MTI was developed through extensive consultations involving the Ministry of Health, universities, research institutions, and development partners.

The system relies on nationally representative data and is designed to minimise both exclusion and inclusion errors.

According to current operational data, the Authority says the model largely favours low-income households. It reported that 92% of informal sector households are assessed monthly contributions of Sh850 or less, with 45% falling within the Sh300–500 band and 47% within the Sh501–850 range.

Only a small fraction—7.1%—fall in the Sh1,001–3,499 bracket, while just 0.4% are assessed above Sh3,500.

“This demonstrates that households are mostly placed in lower contribution bands rather than forced into high payments,” the statement noted.

To cushion vulnerable groups, SHA said it integrates data from the State Department for Social Protection to identify indigent households whose contributions are fully subsidised by the government.

The Authority also highlighted the introduction of Lipa SHA Pole Pole, a flexible payment plan that allows informal sector workers to repay contributions in instalments aligned with their income cycles.

Recognising potential gaps in the system, SHA acknowledged that no data model is flawless and urged affected members to utilise its appeals mechanism.

“Any member who feels the contribution assessed does not reflect their reality can request a review and receive a prompt response,” it said.

The Authority added that it is strengthening the appeals process by simplifying procedures, shortening review timelines, and introducing alternative dispute resolution mechanisms.

SHA reaffirmed its commitment to refining the tool, strengthening partnerships with government agencies and stakeholders, and ensuring that vulnerable households are protected from financial hardship.