National hospital insurance fund pricing model: a paradigm shift

Opondo, John Omondi
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Strathmore University
The NHIF contribution rates have been constant ever since they were last adjusted in 1989. With the increasing level of expenditure due to price and medical cost inflation, this rates are not sustainable in providing benefits to its members and their dependents and meeting administrative expenses. This research project aims to solve this problem by proposing a model for pricing contribution rates that factors in the increase in levels of expenditure over time and therefore ensuring that future liabilities are met. It also aims to ensure equity in the way contributions are made towards the health insurance fund, with high income earners subsidizing for the low income earners. A sustainable contribution rate that is a percentage of insurable earnings is calculated based on forecasts for the next ten years from past data collected from NHIF and KNBS for financial year 2003/2004 to financial year 2013/2014.