The Social Health Authority (SHA) has responded to a documentary by Africa Uncensored that questioned the fairness and design of the Means Testing Instrument (MTI) used to determine contributions.
The investigative documentary concluded that the MTI relies on an AI-based model to estimate household income, using proxies such as living conditions, assets, and lifestyle indicators.
According to the documentary, concerns about the model’s limitations had been raised prior to its national rollout, yet implementation proceeded regardless.
In its response, SHA acknowledged the concerns raised by the documentary, terming the scrutiny essential in shaping fair health financing systems and ensuring accountability.
It went further to contextualize the introduction of the new system, arguing that it was necessitated by deep-rooted structural weaknesses in the now-defunct NHIF.
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"The transition to the SHA was necessitated by the structural and equitable failures of the defunct National Health Insurance Fund (NHIF). Historically, the NHIF relied heavily on the 20% of Kenyans in formal payroll employment to finance healthcare for the entire country, an unsustainable model that promoted inequality and left the vulnerable behind. More critically, the NHIF contribution structure was highly regressive and lacked the core principle of social insurance risk pooling," the statement read.
SHA highlighted how the NHIF contribution structure placed a heavier burden on low-income earners compared to wealthier individuals, penalizing those with the least capacity to pay.
"It effectively punished low-income households by charging them a disproportionately higher percentage of their earnings; those with the lowest incomes were charged up to 5%, while high-income earners paid as little as 1.12%," the statement added.
SHA went on to provide a comparison showing how individuals with vastly different incomes were treated under the old system.
"If, for example, and individual whose income is Kes. 1,000,000 per month was charged Kes. 1,700 which translates to 0.17% while an individual whose informal income is Kes. 10,000 was required to pay Kes. 500 which translates to 5% of their income. This is where the system was punishing the poor for being poor," the statement continued
In contrast, SHA stated that the current system is designed to correct these imbalances by introducing a proportional contribution model that aligns payments more closely with actual ability to pay.
"The determination of member contributions under the Social Health Insurance Act, 2023, addresses this historical injustice. The new statutory flat rate of 2.75% of household income, subject to a minimum of Kes. 300 per month, serves as an equalizer. It abandons the regressive model and ensures that all Kenyans contribute proportionally based solely on their ability to pay. Through this equitable recalibration, 54% of formally employed contributors who were previously disadvantaged by the NHIF structure have benefited from a reduction in their premium contributions," the statement noted.
Addressing criticism over the use of proxy indicators in determining income levels, SHA defended its reliance on Proxy Means Testing (PMT), explaining that such systems are widely used globally to assess eligibility for social programs
"To implement this 2.75% equitable mandate for the non-salaried and informal sectors, the Authority utilizes Proxy Means Testing (PMT). This approach is not unique to Kenya; it is a globally recognized best practice for directing healthcare subsidies and social assistance. Countries like Colombia and Indonesia use similar structured PMT systems to identify vulnerable populations, while nations like the United States and the United Kingdom rely on traditional means testing to manage programs like Medicaid and Universal Credit," the statement explained.
SHA also rejected suggestions that the MTI was hastily or narrowly developed, stating that it was the result of broad-based consultations involving multiple stakeholders, including experts and institutions.
'The MTI was not developed in isolation. It is the product of extensive collaboration led by the Ministry of Health and in consultation with various stakeholders during its design, including universities, research institutions, government entities, and development partners. Reports and technical input from external experts were incorporated into the tool improvement," the statement further read.
On the issue of accuracy and fairness, SHA noted that the MTI relies on official data and is continuously updated to reflect changing household conditions.
"The Authority MTI process uses official data and continually evolves as household information improves. Technical parameters were developed using nationally representative household data, with the objective of minimising both exclusion errors (failing to identify households that genuinely cannot afford contributions) and inclusion errors (assigning subsidies to households that do not require them)," the statement added.
SHA further clarified that some of the concerns highlighted in the documentary relate to aspects of the model that are still under development and do not affect current contribution assessments.
To counter claims that the system disadvantages low-income households, SHA presented internal data indicating that the majority of informal sector households are assessed within lower contribution bands, suggesting that the system largely protects those with limited financial means.
Explaining how these outcomes are achieved, SHA said it uses a banding system that groups households into categories and applies the lowest possible contribution within each band, thereby cushioning against potential overestimation by the model.
"This demonstrates that households are mostly placed in lower contribution bands rather than forced into high payments. SHA applies a banding system, grouping households by similar income and charging the lowest possible rate per group and same is adjusted in the individual household estimates. This approach reduces unfairness and shields low-income households. Meaning, the SHA tool takes the lower bound estimate of each household, adjustment that were necessary to deal over or under estimation challenges," the statement noted.
In the end, SHA acknowledged that no model is perfect, asking households to challenge assessments they believe are inaccurate, noting that an appeals mechanism is already in place and being strengthened.
"SHA recognises that no data system is flawless. Household circumstances change; incomes can fall, or breadwinners be lost. If a member feels the contribution assessed does not reflect their reality, appeals are crucial. The appeals mechanism is built into the means-testing module, enabling households to contest their assigned premium. SHA is making this process simpler and faster. Any member who feels they were assessed unfairly can request a review and receive a prompt response," the statement read.
SHA added that it is enhancing dispute resolution processes to ensure fairness and efficiency in handling complaints, including the introduction of alternative mechanisms beyond the standard review framework.
"To strengthen this further, SHA is enhancing the appeals process with clear premium decisions, accessible appeal channels via digital and assisted platforms, shorter review timelines, and corrections of premiums when genuine errors are found.
“In addition to the standard statutory review, we are embedding comprehensive Alternative Dispute Resolution (ADR) mechanisms into our framework to handle contributor disputes equitably," thr statement concluded.
