Introduction
The enactment of the Social Health Insurance Act, 2023 marked a significant shift in Kenya’s statutory framework for financing healthcare. The Act repealed the National Hospital Insurance Fund Act and established the Social Health Authority (SHA) to administer the country’s social health insurance system.
The legislative framework was introduced with the objective of advancing the constitutional right to health under Article 43(1)(a) of the Constitution of Kenya, 2010, while establishing a more comprehensive and sustainable mechanism for financing healthcare.
Since its enactment, however, the framework has been subject to regulatory amendments and constitutional litigation, making it important to consider the current legal position rather than relying solely on the original 2023 framework.
The Social Health Authority and the Three Funds
Section 4 of the Act establishes the Social Health Authority, which is responsible for administering the social health insurance system.
The Act establishes three funds, namely the Primary Healthcare Fund, the Social Health Insurance Fund (SHIF), and the Emergency, Chronic and Critical Illness Fund (ECCIF).
The separation of these funds is intended to provide distinct financing mechanisms for primary healthcare, general healthcare services and specified emergency, chronic and critical healthcare needs.
The Authority is also mandated to register beneficiaries, receive and manage contributions, empanel and contract healthcare providers, and purchase healthcare services on behalf of beneficiaries.
Contributions and Employer Obligations
A significant change from the former NHIF framework is the manner in which contributions are calculated.
Under the current framework, salaried employees contribute 2.75% of their gross salary or wages, subject to the prescribed minimum contribution. Employers are required to deduct the applicable amount from employees’ remuneration and remit the same to the SHA within the statutory timelines.
The obligation therefore creates a direct compliance responsibility for employers. Failure to make the prescribed deductions or remit contributions within the required period may expose an employer to statutory consequences.
Employers should accordingly ensure that their payroll systems, employment records and statutory remittances are aligned with the prevailing SHA requirements
Access to Healthcare and the Legal Position on Contributions
The Act originally contained provisions linking registration and contribution status to access to public services and healthcare.
These provisions became the subject of constitutional litigation in Cabinet Secretary, Ministry of Health v Aura & 13 Others [2024] KECA 2 (KLR). The Court of Appeal suspended the High Court orders that had restrained implementation of the Act but expressly maintained the suspension of section 26(5), section 27(4) and section 47(3) pending determination of the appeal. These provisions respectively concerned linking registration and contributions to access to public services, requiring contributions to be up to date for access to healthcare, and unique identification for purposes of healthcare.
The litigation demonstrates the constitutional limitations that may arise where statutory mechanisms for financing healthcare potentially affect the enjoyment of fundamental rights.
Public Participation and Constitutional Compliance
The constitutionality of the Act has also been considered in the context of Articles 10 and 118 of the Constitution, which require public participation in the legislative process.
In Aura v Cabinet Secretary, Ministry of Health & 11 Others [2024] KEHC 8255 (KLR), the High Court held that the Social Health Insurance Act, together with the Digital Health Act and Primary Health Care Act, had been enacted without adequate and inclusive public participation. The Court directed Parliament to undertake the necessary public participation and address the unconstitutional provisions.
The decision was subsequently challenged before the Court of Appeal. The appellate proceedings resulted in a stay of the High Court’s implementation orders, allowing the broader statutory framework to continue operating while preserving the suspension of specified provisions.
The litigation is significant because it illustrates that the implementation of social health insurance is subject not only to healthcare policy considerations but also to constitutional principles governing legislation and administrative action.
Healthcare Benefits and Tariffs
The Act must be read together with its subsidiary legislation and applicable healthcare tariffs.
The regulatory framework prescribes the healthcare services payable through the respective funds and provides for the empanelment and contracting of healthcare providers. The applicable tariffs determine the rates at which specified healthcare services are purchased by the Authority.
These tariffs have continued to evolve following the introduction of the SHA framework. Consequently, healthcare providers, employers and other stakeholders should refer to the prevailing regulations and tariff schedules rather than relying on the original 2023 provisions.
Data Protection Considerations
The administration of the SHA system necessarily involves the collection and processing of substantial amounts of personal and health-related information.
The handling of such information must therefore be considered alongside the Data Protection Act, 2019, particularly given the sensitivity of health data.
Employers, healthcare providers and other entities participating in the SHA framework should ensure that personal information is collected, processed, stored and disclosed only in accordance with applicable data protection requirements.
Implications for Employers and Businesses
The SHA framework creates several areas of legal compliance for employers and businesses.
These include the accurate calculation and timely remittance of statutory contributions, maintenance of proper employee records, compliance with applicable employment obligations and responsible handling of personal data.
Businesses should also monitor amendments to the regulatory framework and healthcare tariffs, as changes to the applicable legal requirements may have direct financial and operational implications.
Conclusion
The Social Health Insurance Act, 2023 represents a fundamental restructuring of Kenya’s healthcare financing framework. While its principal objective is to advance universal health coverage and give effect to the constitutional right to healthcare, its implementation has raised significant questions concerning statutory compliance, constitutional rights, public participation, data protection and the administration of healthcare benefits.
