The Social Health Authority (SHA) has defended the Means Testing Instrument (MTI) following an exposé by investigative agency Africa Uncensored, which alleged that the tool used to determine Social Health Insurance Fund (SHIF) contributions overcharges the poor while undercharging the rich.
The investigation titled “Error by Design: How SHA’s AI System is Failing Kenyans” disclosed that some of the poorest Kenyans are being charged premiums that are out of reach for them.
It also revealed that families struggling to afford basic food are being assigned contribution amounts they can hardly meet. In some cases, critically ill patients are reportedly unable to access treatment because they have not paid the amounts determined by the AI-based system.
SHA Defends Means Testing Tool After Exposé
In a strongly worded statement issued on Wednesday, May 6, SHA said the defunct National Health Insurance Fund (NHIF) relied heavily on the 20% of Kenyans in formal employment to finance healthcare for the entire population, a model it described as unsustainable and unequal.
It further argued that the NHIF contribution structure was regressive and failed to uphold the principle of social insurance risk pooling.
The Authority noted that under the old system, low-income households were disproportionately burdened. “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%,” SHA said.
For example, SHA stated that an individual earning KSh 1,000,000 per month was paying about KSh 1,700, equivalent to 0.17%, while another earning KSh 10,000 was required to pay KSh 500, equivalent to 5% of their income. “This is where the system was punishing the poor for being poor,” the Authority said.
SHA said the Social Health Insurance Act, 2023, introduced a new framework, setting a flat rate of 2.75 percent of household income, subject to a minimum monthly contribution of KSh 300.
The Authority said the model is designed to ensure contributions are based on an individual’s ability to pay.
According to the Authority, the new structure has benefited about 54% of formally employed contributors who previously paid more under the NHIF system.
“To implement this 2.75% equitable mandate for the non-salaried and informal sectors, the Authority utilizes Proxy Means Testing (PMT),” SHA said, adding that similar systems are used globally in countries such as Colombia, Indonesia, the United States, and the United Kingdom.
Also Read: Breakdown of All Services Covered by SHA and Payouts Reserved for Each
SHA on Data-Driven System and Safeguards for Vulnerable Households
SHA further said the MTI was developed through consultations with stakeholders, including the Ministry of Health, universities, research institutions, government agencies, and development partners. It said technical inputs were incorporated to improve the tool.
The Authority added that the MTI relies on official data and continues to evolve as household information improves. It said the system is designed to minimize exclusion and inclusion errors in determining contributions.
SHA noted that current data show that 92% of households in the informal sector are assessed at Ksh 850 or less per month, with 45% falling in the Ksh 300–500 band and 47% in the Ksh 501–850 band. Only 7.1% are assessed between Ksh 1,001–3,499, while 0.4% fall above Ksh 3,500.
“This demonstrates that households are mostly placed in lower contribution bands rather than forced into high payments,” SHA said, adding that it applies a banding system to group households and charge the lowest possible rate per group.
The Authority also said the model includes safeguards for vulnerable populations through an exclusion-by-inclusion rule that integrates data from the State Department for Social Protection to identify indigent households whose contributions are fully subsidized by the government.
Also Read: Process for Claiming KSh300,000 from SHA in Case a Teacher Dies
Flexible Payments and Appeals Mechanism Introduced
To support households in the informal sector, where incomes are often irregular and unpredictable, the Authority has introduced Lipa SHA Pole Pole.
The premium financing arrangement allows the annual contribution to be paid upfront on behalf of members, with repayments made flexibly on a daily, weekly, or monthly basis, depending on individual income cycles.
SHA has acknowledged that no data system is perfect, noting that household circumstances can change, including loss of income or the death of a breadwinner. The Authority says members who feel their assessed contributions do not reflect their reality are entitled to seek a review.
According to SHA, the appeals mechanism is embedded within the means-testing module, allowing households to challenge their assigned premiums. The Authority says it is working to simplify and fast-track the process to ensure quicker responses for affected members.
“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 identified,” the Authority said.
In addition to the statutory review process, SHA added that it is also integrating Alternative Dispute Resolution (ADR) mechanisms into the framework to handle contributor disputes.
