Together with housing levy and increased pay as you earn (Paye) for some workers, the middle class have lost a substantial chunk of their pay, forever, to the government.
A Kenyan earning a gross salary of Sh500,000 for instance will be deducted Sh161,957.
This consists of SHIF deduction of Sh13,750, NSSF of Sh2,160.00, Paye of Sh138,547.86 and housing levy of Sh7,500.
This is an increase of about 17,373 from 2022 when President Uhuru Kenyatta retired.
The Social Health Insurance Fund took effect this month, with workers now being hit by the reality of the new rate imposed by President William Ruto’s administration.
Each Kenyan is expected to pay 2.75 per cent of their gross income the highest levy on salaries since independence.
Kenyans in the informal sector are also expected to pay 2.75 per cent of their earnings, to be determined by a means testing tool that is still non-operational.
Under the NHIF, the lowest monthly premium was Sh150, rising to Sh950 for Kenyans earning Sh35,000.
Any gross earnings above Sh35,000 will now attract a higher levy, up to 16 times more for high earners.
SHA will take away Sh963 every month for those earning Sh35,000. Those earning Sh100,000 gross pay will lose Sh2,750 every month, or Sh33,000 a year.
The maximum NHIF monthly premium was Sh1,700 for those earning Sh100,000 and above.
The highest amount a Kenyan earning a gross pay of Sh100,000 may take home now is Sh79,000, after the Paye, SHIF, NSSF and housing levy deductions.
Kenyans earning Sh200,000 gross monthly pay will contribute Sh5,500 every month to SHIF or Sh66,000 a year.
This amount is comparable to the amounts Kenya pay for private health insurance cover, which most employers offer.
Those earning Sh300,000 monthly gross pay will lose Sh99,000 to SHIF every year.
Kenyans in this income bracket are few and already heavily taxed.
There is already discontent because many of the SHA benefits are low compared to private insurance schemes, calculations show.
Public health specialists and health economists, for instance, questioned the wisdom of allocating Sh935 per household in one year to buy eyeglasses.
John Kiragu, a public health specialist and member of the Health Economics Association of Kenya, recently said the funding should be reviewed.
“Increase eye care funding prioritisation by enhancing reimbursement rates in the benefits package to be between Sh5,000 and Sh8,000 based on current market prices for spectacles and their accessories to alleviate suffering among the young and poor people with uncorrected refractive errors,” Kiragu said.
Most private insurers offer about Sh20,000 for glasses. SHA has also allocated Sh900 for outpatient per person a year. This is much lower than the Sh1,500 allocated by NHIF.
Health economists and trade union leaders who spoke to the Star paint a gloomy picture for workers, asserting that while the state is overzealous in raiding the increasingly thinning payslip of the working class, the taxpayers do not get value for money.
Nyatike MP Tom Odege, who is also the secretary general of the Union of Kenya Civil Servants, says with the coming into force of the new SHIF deductions, workers are now losing up to 40 per cent of their incomes to tax and statutory deductions that do not add value to their lives.
“Working in Kenya has become unbearable. Workers are losing over 40 per cent of their income to taxation and statutory deductions, making it very difficult to operate and meet your normal expenditure,” he said.
As a recourse, Odege said trade union leaders are increasingly losing patience and will soon embark on campaign to have salary increment, an initiative that often features confrontation between the labour sector and the government, and usually involves downing of tools.
“As representatives of workers we are left with few options but to demand for more pay to help workers survive,” he said.
Alex Kireria, a health policy analyst, believes the government bungled the design and implementation process of the health insurance scheme.
“For you to design and successfully implement a new policy, you start by conducting a baseline survey to determine people’s attitude towards it, its acceptability, affordability and other stuff. The outcome of the survey is what then feeds the policy and which in turn inform the strategy of work. e entire SHIF edifice lacks all that,” Kireria said.
“This fundamental aberration cannot be talked out. Yes, there is the parent law but its implementation is totally bungled and it’s Kenyans who are suffering. But it is sad the government is raiding the middle class payslip to underwrite all this sham.”
Nicholas Mwangi, a health economist, told the Star that while the concept of social insurance is right, the design and implementation of SHIF has not been well thought through.
“Social insurance works well in an economy with many salaried people that then forms a big pool to draw from. In our case, we have a thinning middle class from which the government wants to draw every fund,” he said.
The economist believes the SHIF policy is not necessarily for rolling out an effective health insurance but to raise revenue.
“Nothing confirms this more than the fact that the SHIF people are always writing long lists of services but severely limit the funding of the services. So, when people go to hospitals, there is no service, meaning the public are forced into their pockets and the middle class have to maintain an expensive private insurance policy. Poor Kenyans have to remain in social groups where endless health fundraisers take place. This, despite the steep deductions continuing. It is sad and unjust,” Mwangi said.
“The middle class is getting a raw deal in this country because even for those at the bottom of the pyramid, they have to look to the middle class for support, and this lot is often one paycheck or disease a way from poverty.”
Groups representing workers are now questioning the benefits workers will get from the health levy.
Doctors say higher deductions are not commensurate with the benefits package or the actual services available in hospitals.
SHIF is one of the three funds administered by the Social Health Authority, the new body that replaced the National Hospital Insurance Fund.
While SHIF is funded through premium contributions, the other two funds – the Primary Healthcare Fund and Emergency, Chronic and Critical Illnesses Fund - will be financed by the government through taxes, donations and gifts.
“SHA is deducting more from workers’ salaries, but providing less. This is unacceptable, as workers are paying more for substandard services, threatening their well-being,” said Davji Atellah, secretary general of the Kenya Medical Practitioners Pharmacists and Dentists Union.
The government directed employers to pay the levies to any of the six banks collecting the money for SHA.
“We urge Human Resource Practitioners to declare their employees on the employers portal to guarantee their eligibility to benefit under the Social Health Authority. Employees who are not declared cannot access services even if they have self-registered,” Health PS Harry Kimtai said.
“We also have our own pay bill number for individuals who wish to pay via M-Pesa. Generate the eSlip number and use M-Pesa pay bill number 200222 to pay.”
Health facilities will be refunded Sh11,200 for normal delivery and Sh32,600 for caesarean section.
Experts say some of these tariff s are below market price and Kenyans may still top up in some hospitals.
The fund will pay Sh2,400 for bed admission every day. The NHIF has been paying Sh4,000 daily. The admission is capped to 50 days maximum.
However, the rebates for some services have been enhanced, to the benefit of healthcare facilities.
For instance, facilities will be refunded Sh10,650 for dialysis per session and Sh180,000 per month for peritoneal dialysis. There is a maximum of three sessions per week for haemodialysis, compared to two sessions only under NHIF.
