Audit proposes changes to NHIF law

June 17, 2011 7:47 am

, NAIROBI, Kenya, Jun 16  – An audit report on the National Hospital Insurance Fund (NHIF) has suggested the amendment of the NHIF Act to improve the Fund\’s governance.

The independent report by Deloitte Consulting Limited says there is need to widen the representation on the Board to include under-represented contributors such as the civil servants.

"There is also need to broaden the skills available in the Board to reflect the health insurance and financial management aspects of its operations," the report states in part.

"This would require an amendment to the current Act with skills specifications for Board members," it goes on to say.

The current Board of Directors include representatives of government, non-governmental organisations, Federation of Kenya Employers, Kenya Medical Association, Kenya National Farmers Union, Kenya National Union of Teachers, Central Organisation of Trade Unions, Christian Health Association of Kenya and Association of Kenya Insurers.

The Deloitte report seen by Capital News also calls for financial disclosure and accountability to contributors to increase transparency.

"This can be through quarterly public disclosure of financial and operational information through publishing in the local media and posting on the website," the report proposed.

It has also suggested that NHIF should hold Annual General Meetings for its members to give audited financial accounts.

"In order to attract new members and increased contributions, NHIF must be trusted by the general public and should be fully accountable to its members," the report stated.

It further says that disclosure and accountability of NHIF was mainly to the government as opposed to the members.

"Financial and operational information is also shared with the Board of Directors during their meetings but it is not clear if the directors share this information with their appointing institutions," it states.

This has led to a perception gap as the general public is not greatly aware of NHIF\’s operations and performance, it says.

The report further notes that NHIF has had "significant legacy issues" from the pre-2003 period which included investments in failed financial institutions, financial surpluses not used towards benefits and significant investment in fixed assets.

"NHIF has been working to regain public trust, has put in place a professional non-political management, and there is constant monitoring and auditing by government agencies," the report says adding that transparency, accountability and efficiency had become the focus of the fund and its employees and zero tolerance to corruption and unethical practices had been entrenched in the funds culture.

It recommends that because contributors are connected to the fund through their representatives in the Board of Management, there is need for the stakeholder organisations to review the means by which they report back to their constituents and determine any improvements as may be required.

"The assumption is that the Board Representatives are reporting back to their constituents and seeking input on major decisions or general feedback on the Fund with regard to their specific constituencies. Organisations are left to determine their own reporting and feedback mechanisms or guidelines," the report states.

NHIF is the government-run health insurance scheme in which all people earning Sh1,000 and above per month have a legal requirement to contribute towards the fund.

Deloitte Consulting Limited was in August last year jointly commissioned by the International Finance Corporation (IFC), Ministry of Medical Services and NHIF to carry out a comprehensive strategic review of NHIF and a market assessment of the prepaid health schemes in Kenya.

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