“Sharing a healthy moment”
PRACTICE OF HEALTH
INSURANCE IN KENYA
CHALLENGES & INNOVATIONS
By
Douglas Machuki
CONTENTS
 Background
 Challenges in Health Care Provision
 The Future – Possible Innovations
 Conclusion
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Introduction & Background
 Healthcare constitutes an essential element of human life
 Desirable benefit available to organizations, individuals and
their families
 Provided and financed through different mechanisms
o On-site facility (Staff Clinic)
o Direct contracts with private practitioners and facilities
 Employers provide annual expenditure per employee
 Offering vary depending on employee category
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Introduction & Background Cont’d
 In-house / Self Administration
o Reports of high fraud levels
o Doctor / Patient collusion
 Financing healthcare by purchasing cover
o Insurance Company
o Medical Insurance Provider
 Number of providers have found health care unprofitable
 In-patient has been main offering
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Introduction & Background Cont’d
 Costs for private medical services often exceed individual’s
ability to pay
 Providers and stakeholders seeing need for concentrated
and sophisticated effort
 Need for more efficient structured, affordable & sustainable
healthcare programs
 Creating need and opportunity for intervention by experts in
areas of healthcare provision esp. actuaries
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Challenges in Health Care Provision
 Focus on practical and operational challenges rather than
theoretical or hypothetical experiences
 Matching products and services provided with consumer
needs
 Need to structure and address the following:
o How is the product design done?
o Does product achieve the objective of “fitness of purpose”?
 Actuarial profession well placed to provide some of the
answers
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Challenges in Health Care Provision Cont’d
 Analysis of random size and frequency of risk
 Risk analysis and measurement
 Risk classification and cash flow projections
 Solvency and profitability
 Areas where actuarial expertise needed
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Challenges in Health Care Provision Cont’d
 Ill health in unknown territory
 Disability and sickness are unpredictable and bills can be of
unknown size
 Individuals wish to minimize risk that healthcare breakdown
will disrupt them financially
 Insurers study mountains of data, undertake rigorous
analysis and use results to minimize risk exposure
 Underwriters will require good quality data which is usually
not readily available
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Challenges in Health Care Provision Cont’d
 Need to work both public and private sector
 Need to increase value of future information
 Need to perform sound analysis from that which is currently
available
 Actuarial approach to data and analysis is quite thorough
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Challenges in Health Care Provision Cont’d
 Need for effective membership, underwriting and claims
management
 Low level of interaction with medical professionals
 Need for health insurance practitioners to constantly engage
 Disease management and evidence based medicine will
significantly benefit from such a partnership
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The Future – Possible Innovations
 Health Insurance system in Kenya is struggling with a
myriad of problems
 Price of health insurance is frequently beyond reach of
many potential consumers
 Certain to continue upward spiral in years ahead
 Future does not have a very attractive proposition: One
Pays Too Much, and Gets Too Little
 Solution lies with business community and advice they get
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The Future – Possible Innovations Cont’d
 Embrace new model of health coverage
 New model should place control of cost and care directly in
hands of consumer
 Consumer-driven healthcare based on bottom up
 Enable insurers and consumers create better, cheaper ways
to deliver high quality care
 Traditional insurers that impose stringent controls /
exclusions usually resisted by consumers and price
competitive pressures have not helped much
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The Future – Possible Innovations Cont’d
 Problem persists because “It is in the financial interest of the
market’s participants to increase costs” (This includes the
consumer)
 Consumers want as much as they can rather than as much
as they need (over-utilization, abuse)
 Same thought pattern and structure is also true for health
care professionals
 Hospitals and doctors treat patients based on coverage
rather than actual need
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The Future – Possible Innovations Cont’d
 Doctors stand to profit from various courses of treatment
(Increasing costs => income increase)
 Costs will easily be shifted to third party payer
 Market needs to be normalized to curtail widespread abuse
 Cost inflation and abuse is inevitable as long as wasteful
and inefficient behavior is in the interest of primary
participants
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The Future – Possible Innovations Cont’d
 Current health insurance model resembles way companies
used to manage their employees’ retirement savings
 Employees given no choice, no control, and very little
information
 Effects were dramatic when employees began to have a say
 Locally shift to employee-controlled pension plans is
succeeding despite much enormous skepticism
 Similar consumer revolution can take place with health care
benefits
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The Future – Possible Innovations Cont’d
 Employers need to give employees substantially enhanced
choice among health plans
 Much greater control over how much they spend for various
health needs
 Much more information to help employees make the right
choices
 Consumer demand will then force underwriters to provide
more innovative products
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The Future – Possible Innovations Cont’d
 Competition will in turn control costs while
improving overall quality and coverage and care
 Essential problem with health care industry is that
“it has been shielded from consumer control by
various stakeholder”
 Costs have therefore exploded and choices
narrowed
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Conclusion
INTEREST IN HEALTH INSURANCE COMES AT A TIME
WHEN CHANGES ARE HAPPENING IN THE INSURANCE
INDUSTRY IN KENYA
NEED TO BUILD A COST-EFFECTIVE AND SUSTAINABLE
VEHICLE THAT ADEQUATELY ADDRESSES THE IDENTIFIED
PROBLEMS AND CHALLENGES
NEED TO ENGAGE DIFFERENT STAKEHOLDERS IN
ADDRESSING THESE PROBLEMS AND CHALLENGES
ESPECIALLY THE ACTUARIAL PROFESSION
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Thank You
DISCOVERY HEALTH EAST AFRICA LIMITED
E-MAIL: info@discoveryhealth.co.ke
www.discoveryhealth.co.ke
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