My colleague sort treatment at a health facility where her cdition needed surgical intervention. The admitting officer informed my colleague that she owed SHA KES 42,000, but proceeded to inform her that even after paying the SHA premiums the procedure was an exclusion as per the gazetted procedures that SHA pays for. My colleague used the money to get her family a decent private insurance cover instead.
So Is It Time to Change Kenya’s Health Insurance Model?
The question Kenya must honestly answer is this: Are we building a sustainable healthcare financing system, or are we merely sustaining a political narrative?
The Social Health Authority (SHA) was introduced with the promise of delivering Universal Health Coverage (UHC) by financing the entire continuum of healthcare—from health promotion and disease prevention to curative, rehabilitative, and palliative care. It was sold as the solution that would finally guarantee healthcare for all Kenyans.
Yet barely two years into implementation, fundamental cracks have emerged.
The time has come to ask whether Kenya needs not just reforms to SHA, but a complete rethink of its healthcare financing model.
The False Narratives That Built SHA
1. “Those Who Earn More Should Pay More”
The introduction of a mandatory 2.75% SHA levy was justified on the basis that higher earners should contribute more.
This argument ignores a fundamental fact.
Higher earners already pay significantly more tax through the progressive PAYE system, with rates reaching 30% and beyond. The principle of equity in taxation was already being achieved through PAYE. The responsibility of government should have been to allocate a reasonable proportion of those tax revenues to healthcare.
Instead, Kenyans were subjected to an additional health tax layered on top of existing taxes, housing levies, and numerous statutory deductions.
The result is not equity.
It is double taxation.
At the same time, large portions of the informal sector remain outside the tax net entirely, leaving a shrinking formal sector carrying an increasingly unsustainable burden.
2. “Everyone Will Contribute”
SHA was built on the assumption that both formal and informal sector workers would contribute consistently.
This assumption has proven unrealistic.
The recent Africa Uncensored investigation exposed the weaknesses of the Proxy Means Testing (PMT) model used to determine contributions for informal sector households. These weaknesses were predictable. Similar systems have failed elsewhere because ability to pay is dynamic and cannot be accurately determined using household proxies and algorithms.
A farmer may have assets but no cash.
A trader may have income today and none tomorrow.
A boda boda rider may earn enough one month and struggle the next.
Healthcare financing models cannot be built on assumptions that do not reflect economic realities.
3. “Government Will Honour Its Commitments”
The original SHA financing framework projected substantial government funding:
• KES 75 billion for the Primary Healthcare Fund (PHCF)
• KES 50 billion for the Emergency, Chronic and Critical Illness Fund (ECCF)
Together, this represented approximately KES 125 billion in government support.
Today, it is increasingly evident that these commitments are unlikely to be fully funded in the foreseeable future.
A health financing model that depends on government contributions which never materialize is not a financing model.
It is wishful thinking.
SHA Is Trying to Do Too Much
One of the greatest strategic errors of SHA is attempting to finance everything.
No health financing system can sustainably cover promotion, prevention, primary care, emergency care, chronic disease management, specialized treatment, rehabilitation, and catastrophic illness without clearly defined priorities and adequate funding.
The result has been predictable:
• Delayed provider payments.
• Growing debt.
• Increased claim rejections.
• Reduced provider confidence.
• Growing patient dissatisfaction.
Healthcare financing follows a simple principle:
If you try to fund everything, you eventually fund nothing adequately.
SHA must make a strategic choice.
Either finance primary healthcare and prevention exceptionally well, or focus on curative and catastrophic care.
Attempting both without adequate resources is financially unsustainable.
The Debt Crisis Nobody Wants to Discuss
SHA inherited the legacy debts of NHIF.
Providers were assured that these debts would be settled.
They remain largely unpaid.
Worse still, SHA debts are accumulating faster than NHIF debts ever did.
This raises a simple question:
What is the purpose of a health insurance system that cannot honour its obligations to the very healthcare providers upon whom it depends?
Hospitals cannot pay salaries using promises.
Pharmacies cannot purchase medicines using assurances.
Doctors, nurses, and clinical officers cannot provide services indefinitely without payment.
An insurance system that does not pay its providers eventually collapses because providers withdraw their trust long before patients lose theirs.
Managed Care Through the Back Door
When SHA was introduced, its architects repeatedly stated that it would not operate as a managed care scheme.
Reality has turned out differently.
The system increasingly uses benefit limits, utilization controls, pre-authorizations, and reimbursement restrictions that function as forms of managed care.
What has emerged is not healthcare financing but healthcare rationing.
Cost containment has become the dominant objective.
The danger is that financial sustainability is being pursued at the expense of healthcare access.
Fraud: The Real Elephant in the Room
Every discussion on healthcare financing eventually arrives at fraud.
Fraud exists.
It must be confronted.
But we must be honest about where fraud occurs.
Healthcare fraud is rarely the work of providers alone.
It is usually a collusion between rogue healthcare workers and rogue personnel within payer systems.
SHA was introduced partly on the promise that fraud would be reduced.
Yet allegations of fraudulent payments and irregular claims continue to emerge.
More concerning is the tendency to classify ordinary clerical mistakes as fraud.
Missing signatures.
Incorrect dates.
Incomplete documentation.
These are quality assurance issues.
They are not necessarily criminal acts.
The result has been rejection of thousands of legitimate claims, depriving healthcare facilities of genuine revenue.
This has consequences:
• Facility closures.
• Staff layoffs.
• Reduced investment.
• Deteriorating morale.
• Reduced patient access.
SHA should establish an intermediate validation layer that identifies documentation errors before claims are transmitted for adjudication. This would allow corrections at source rather than blanket rejection at the end of the process.
Healthcare Providers Are Not The Enemy
Perhaps the greatest perception problem facing SHA is the growing belief among healthcare providers that the system is designed to collect contributions while minimizing payouts.
Whether true or not, that perception is dangerous.
Healthcare providers are not vendors supplying commodities.
They are partners in healthcare delivery.
Without doctors, nurses, pharmacists, clinical officers, laboratories, hospitals and specialists, there is no healthcare system.
A social health insurance scheme should be designed to facilitate care—not create an adversarial relationship with those delivering it.
A Different Path Forward
Kenya needs an honest reset.
First
Separate healthcare financing from political rhetoric.
Healthcare is not free.
Someone always pays.
The debate should focus on who pays, how much they pay, and whether the system is sustainable.
Second
Increase government funding for healthcare.
Allocating approximately 6% of the national budget to health is insufficient.
Government must progressively move toward internationally accepted benchmarks if it genuinely believes healthcare is a national priority.
Third
Review the SHA levy.
The current model places disproportionate pressure on formal sector workers and employers while failing to adequately broaden the contribution base.
A fairer approach would incorporate healthcare financing into existing taxation mechanisms rather than creating additional layers of mandatory deductions.
Fourth
Define SHA’s core mandate.
It cannot sustainably finance every level of healthcare simultaneously.
A clear prioritization framework is urgently required.
Fifth
Pay providers.
Nothing will restore confidence faster than settling NHIF legacy debts and establishing predictable payment cycles for SHA claims.
Sixth
Strengthen the Kenya Medical Practitioners and Dentists Council (KMPDC).
Regulation of healthcare facilities should remain the responsibility of the statutory regulator rather than being duplicated through financing mechanisms.
Conclusion
Universal Health Coverage remains a worthy goal.
But good intentions do not create sustainable systems.
Kenya must confront uncomfortable truths.
Healthcare financing cannot be built on unrealistic assumptions, unfunded government promises, excessive taxation of a shrinking formal sector, delayed provider payments, and a growing distrust between payers and providers.
The objective should not be to defend SHA.
The objective should be to build a healthcare financing system that works.
If that requires changing the model, then Kenya must have the courage to do so before the system collapses under the weight of its own contradictions.
Dr Simon Kigondu is a gynaecologist and a commentator on health policy