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Research: The Cost of Free Healthcare for all Kenyans

  Mar 31, 2017

The need to provide quality and equitable health services and protect populations from impoverishing healthcare costs has pushed universal health coverage (UHC) to the top of global health policy agenda. Strathmore Business School’s Institute of Healthcare Management – senior faculty Dr. Vincent Okungu, recently published an article in the International Journal of Equity in Health.

The article titled; The cost of free healthcare for all Kenyans: Accessing the financial sustainability of contributory and non-contributory financing mechanisms, addresses financial approaches to the policies surrounding the attainment of universal health coverage. The research provides an outlook on alternative financing approaches that should be considered for the realisation of the goal.

The research study continues to elicit great attention across various interest groups through research sharing platforms such as Researchgate and other knowledge management portals. Dr. Okungu’s research interests are quite diverse but mainly focuses on healthcare financing and resource allocation. These includes financing universal health coverage, equity in health, access to services, costing studies and economic evaluation (vaccines and other health services) and financing global health (NCDs).

He has also published on several areas including the following: The cost of UHC, access to malaria interventions (bed nets and medicines), health policy communication, economic costs of malaria, the political economy of UHC, among others. He is currently working on various research fronts including drafting research grant proposals on global health and health sector management.

Here is Dr. Okungu in words as he shares on topical themes distinctive in his research study. Click here to read the research.

What are some of the alternative financing sources that can be used to pay for marginal groups that can hardly afford healthcare?

Any society has the moral obligation to take care of its weaker members; e.g. those who are too poor to pay for health care should have the service catered for by individuals and institutions that can pay.

The source of funding for the vulnerable are mainly through government based tax-funded health system or an insurance entity such as the NHIF. However, significant considerations should be made regarding how the revenue is raised. We need to be efficient in the use of available resources and innovative enough to raise additional revenue without straining the lower income-tire of the population.

How can the informal sector contribute to a tax-funded system whereas there is poor inclusion of them into the contributory pool?

The ideal way to involve the informal sector in a tax-funded universal health system is to come up with a range of indirect taxes that target resources in the sector. A VAT surcharge for example, would be a very good alternative which is likely to be progressive, i.e. based on income.

What are some of the factors that have inhibited a tax-funded system as a preferred method of healthcare financing which the research highly recommends?

There are three main factors: a) lack of political will; (b) historically there has been a trend of financing public health insurance through premium contributions; (c) lack of knowledge among policymakers on the flexibility of fiscal space to finance UHC.

The research highlights the recommendations of WHO regarding mandatory prepayment as the most efficient and equitable financing system for UHC. Does this recommendation affirm the statement that countries that are reforming their health systems to progress to UHC need to consider total resource requirements over the long term to plan for the implementation and sustainable financing of UHC?

Yes. Among the very first issues to address when reforming a health system for UHC is to consider how much it will cost. This will allow for the government to consider all potential sources of revenue, what and who to cover. 

What are the strengths and weaknesses of the two financing models of UHC attainments; the tax- funded system and the mandatory contributory approach in the Kenyan context?

Both systems can mobilize large sums of money for UHC and to ensure access to the needed health services. However, the Kenyan context is greatly characterised with large informal sector populations, and hence, a tax-funded approach to UHC is better because:

  • It ensures rapid population coverage
  • It is more equitable both in financing and in the usage of health services
  • It costs less because there are no additional structures to be set up to collect revenue and purchase services. It also has lower admin costs compared to the contributory approach.

Briefly summarize the key findings and recommendations of the research.

  • Both financing approaches can be financially sustainable but the contributory approach would come at a higher cost and hence much less political acceptability of the approach.
  • There are enough domestic resources in the country to finance universal health coverage. Substantial resources can be generated through innovative direct and indirect taxes.
  • It would be impossible to implement a contributory financing approach to UHC in Kenya because of the large populations in the informal sector.
  • Policy makers therefore need to be aware of the reality of the informal sector and adopt the non-contributory financing approach.

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