Uganda, employers, insurers fail to agree on new insurance scheme

Saturday August 16 2014

UAP Insurance stand during an Insurance expo in Kampala. Uganda insurers want employees to have a free hand in choosing a health insurance scheme, away from the one by the state. FILE PHOTO | MORGAN MBABAZI | NATION

UAP Insurance stand during an Insurance expo in Kampala. Uganda insurers want employees to have a free hand in choosing a health insurance scheme, away from the one by the state. FILE PHOTO | MORGAN MBABAZI | NATION 

By ISAAC KHISA The EastAfrican

Uganda’s plan for a national health insurance scheme has hit a snag yet again with key players failing to agree on premiums and its operation.

The National Health Insurance Bill 2007, which is currently in with the Ministry of Finance awaiting issuance of a certificate of financial implication, requires civil servants and formally employed Ugandans to make mandatory contributions to the National Social Health Scheme.

According to the Bill, workers will be required to pay 4 per cent of their monthly earnings to the health insurance scheme, while their employers remit an additional 4 per cent.

But employees in the informal sector will have the option of signing up with a private medical insurance provider or a community-based insurance scheme, with the government making contributions on behalf of those who cannot afford to.

While the insurance sector recommends the scheme, it demands contributors choose a scheme of their liking as long as the benefits are not inferior to those prescribed by the law.

Insurance firms also want premiums lowered to 1 per cent of employees’ monthly earnings — to be matched by employers.

“We do not agree on the direct contribution towards the scheme. Instead, out of our employee contribution to National Social Security Fund, a proportion — whether 1 or 2 per cent — should be set aside towards the social health scheme,” Rosemary Ssenabulya, executive director at the Federation of Uganda Employers, told The EastAfrican.

Ms Ssenabulya said forcing employers to pay for their employees’ health insurance will increase the cost of doing business in the country, in addition to existing costs such as the 10 per cent contribution to National Social Security Fund that employers pay per month for their staff.

At a stakeholders meeting in Kampala on August 13, insurance firms under the Uganda Insurers Association (UIA), said they prefer each formally employed person and civil servant to contribute one per cent of their pay directly to the national health insurance scheme, after which they can choose whether to contribute the remainder to the scheme or to a private health insurance provider.

UIA chief executive Miriam Magala said the government needs to allow several private fund managers to manage the scheme.

“This makes the private fund managers compete for the contributions, therefore making the scheme competitive and efficient,” Ms Magala said.

However, Dr Francis Runumi, the Commissioner for Planning in the Ministry of Health told The EastAfrican that whereas the ministry will review all the stakeholders’ proposals and incorporate them into the draft Bill before forwarding it to the Cabinet for approval and subsequent debate in parliament, liberalising the national health scheme will not be wise at the start.

“Some countries that allowed liberalisation like South Korea are now trying to consolidate. I suggest that we start with one insurance scheme then open up later if there is a need,” Dr Runumi said.

Dr Runumi said the government needs to be part of the scheme as an overseer in its operations.

In 2010, Rwanda enrolled 8.5 million members in the national health insurance scheme known as Mutuelle de Santé, which depends on citizens’ contributions based on their economic status, though the government pays for those who cannot afford to.

According to the Rwandan government website, contributors pay annual premiums of about $6 per family member (increased in 2011 from $2 per person) with a 10 per cent service fee paid for each visit to a health centre or hospital.

But the sustainability of the community-based health insurance has always been a challenge due to the financial strain resulting from non-remittance of contributions by beneficiaries.

Kenya, under the National Health Insurance Fund, proposed a review of its premium rates in 2012, seeking to have workers earning less than Ksh5,999 ($67) contribute Ksh150 ($1.7) a month or Ksh1800 ($20.4) per year while those receiving a gross pay of more than Ksh100,000 ($1,117) a month would contribute Ksh2,000 ($22.4) per month.

The review has not been effected as workers unions went to court and stopped the review.

All formal sector employees contribute a monthly flat rate of Ksh320 ($3.5) per month, but can only use the cover when admitted to NHIF-accredited hospitals.

Uganda’s insurance penetration stands at 0.85 per cent compared with 2.5 per cent in Rwanda and 3.4 per cent in Kenya, according to Uganda’s Insurance Regulatory Authority.