The National Health Insurance Fund (NHIF) owed hospitals, insurance companies, trade creditors, and the Kenya Revenue Authority (KRA) a combined Sh25.8 billion as of December 31, 2023, a new disclosure showed.
A report by the transition committee to the Social Health Authority (SHA), included in the NHIF Board's November 2024 Exit Report, shows that a significant portion of this debt came from hospital-related claims, totalling Sh15.87 billion for local hospitals and Sh139.63 million for overseas claims.
In addition, the fund owed Sh5.6 billion in insurance claims and premiums to insurance companies, while deferred income amounted to Sh3.6 billion. Other liabilities included trade creditors and rent deposits totalling Sh568.9 million and tax payables of Sh6.38 million.
"The transition review team was provided with a list of NHIF liabilities, which totalled Sh25.8 billion as at December, 31 2023. Trade payables (hospital-related claims) were not verified due to the high number (2.7 million).
High levels of unreconciled NHIF claims are also noted, indicating that NHIF cannot clearly identify its current outstanding claims. It is recommended that the SHA puts in place a mechanism to sub-lease the claims for readability," the report stated.
A major concern highlighted in the report was the number of unverified hospital-related claims, which stood at 2.7 million. The transition committee noted that the NHIF had a high volume of unreconciled claims, which made it difficult to determine the actual outstanding liabilities.
In addition to confirmed liabilities, the defunct NHIF faced contingent liabilities totalling Sh16.1 billion arising from court cases, legal fees, tax arrears and overseas payment guarantees.
According to the report, court claims against the NHIF amounted to Sh14.9 billion, with legal fees for these cases reaching Sh765 million. KRA assessments for tax arrears totalled Sh373 million, while overseas payment guarantees stood at Sh52.4 million.
"The transition review team was provided with a list of NHIF contingent liabilities totalling Sh16.1 billion due to court cases, legal fees, default assessments, and overseas payment guarantees. It is recommended that the SHA monitors and takes appropriate action to mitigate these potential liabilities where possible," the report added.
In response to the challenges facing Kenya's health system, President William Ruto announced measures to address the outstanding debt. On November 17, 2024, he said the government would release an additional Sh2.5 billion to settle debts owed by the defunct NHIF, in addition to the Sh5 billion previously disbursed for universal health coverage.
"We are committed to settling all outstanding claims," the President said.
Four days later, he announced that an additional Sh3.7 billion would be allocated to settle long-standing debts to various medical institutions.
In a U-turn, the President announced on Wednesday that the government would prioritise the settlement of outstanding debts owed to health facilities by the former public insurer, focusing on hospitals with claims of Sh10 million or less.
He noted that this payment would cover 91 percent of all health facilities contracted by the NHIF, which ceased operations on November 22, 2024. Hospitals with claims above Sh10 million will be audited within 90 days before a payment plan is agreed.
