Why NHIF is facing imminent collapse

Dar es Salaam. The government admitted yesterday that the cash-strapped National Health Insurance Fund (NHIF) faces imminent collapse, and urgent measures are needed to pull it from the brink.

Speaking at the official opening of a five-day regional cholera readiness capacity building seminar in Dar es Salaam, Health minister Ummy Mwalimu said NHIF was overwhelmed by claims.

“Our health insurance fund may collapse as it is overwhelmed by a sharp rise in claims related to non-communicable diseases,” she said.

NCDs represent a group of chronic conditions, including cardiovascular diseases, cancer, chronic respiratory diseases, and diabetes, which account for 41 million deaths – or 71 percent of all deaths – worldwide annually.

Ms Mwalimu said Tanzania needs to embark on a public awareness campaign meant to detect early signs and symptoms of diseases, and how to prevent them.

“This plays a key role in helping to stop the spread of diseases. I know we can eliminate cholera from our respective countries,” she said.

Analysts believes that NHIF is in dire financial straits, which explains why it had been struggling to pay healthcare service providers.

Earlier this month, NHIF went public to clarify reports on social media, which sparked debate on the fund’s viability.

Among them were the use of 2016 guidelines on medicine costs despite the increase and decrease in the cost of medicines and tests, and the requirement that a patient could not to be treated at different hospitals using the same medical card within 30 days.

The government directed NHIF to immediately suspend the new arrangement.

Ms Mwalimu said in a statement that the fund may have the good intention of curbing massive fraud committed by some healthcare providers, but ity should first have sat with stakeholders and agreed on the matter.

Last week, the chairperson of Parliament’s Public Investment and Capital Committee, Mr Jerry Silaa, warned that the fund was “running on empty”, something that threatened its sustainability.

This was discovered after NHIF had presented its accounts and investment portfolio, which the committee analysed and concluded that urgent action was needed to rescue the fund.

Proposed measures include a massive campaign to recruit more members since claims lodged by service providers far outstripped NHIF’s income.

“Operating costs are increasing as a result of spiralling claims, but income generated from health insurance bundles is not enough. We have asked the fund to step up efforts to rope in more members,” Mr Silaa said.

He added that the committee had directed the fund’s management to put in place an effective system that would help it control spending and curb fraud.

The committee also advised the fund to look into the possibility of providing quality health-related services that would compete in the market and attract more subscribers, generate more income and ensure its sustainability. A recent study published by the National Centre for Biotechnology Information (NCBI) titled Toward Mandatory Health Insurance in Low-Income countries: An Analysis of Claims Data in Tanzania analysed 26 million claims submitted to NHIF to understand insurance usage patterns, cost drivers and financial sustainability.

According to the analysis, in 2016, half of policyholders used a health service within a single year, with an average annual cost of $33 (equivalents to Sh75,900) per policyholder.

“Estimating the expected health expenditures for the entire population based on the NHIF cost structure, we find that for a sustainable national scale-up, policy makers will have to decide between reducing the health benefit package or increasing revenues,” says the report.

“We also show that the cost structure of a mandatory insurance scheme in a low-income country differs substantially from high-income settings. Replication studies for other countries are warranted.”

On the other hand, it is said that total annual health expenditure per capita for Tanzania is $112 (about Sh257,000), which is similar to other African countries, corresponding to around four percent of the GDP per capita, according to World Bank data in 2021.