Health insurance lessons for Kenya from Germany on the best practices

The recent announcement by the Treasury Cabinet Secretary, John Mbadi, regarding a benchmarking trip to countries like Germany and the United Arab Emirates to inform the implementation of the Social Health Authority (SHA) has sparked considerable debate.

This initiative follows the establishment of the SHA in October 2024, which replaced the National Health Insurance Fund, an institution that served Kenyans for six decades.

While the pursuit of Universal Health Coverage (UHC) is commendable, a closer look at the proposed benchmarks, particularly Germany, reveals a complex landscape with lessons that require careful contextualisation.

Having had the opportunity to study Germany’s health system firsthand, I recognise its success in achieving near-universal coverage.

Their model, established in 1883, mandates health insurance for all residents. Financing is primarily through statutory deductions— a 14 percent levy shared equally between employer and employee, supplemented by government subsidies for those unable to contribute.

This embodies the principle of solidarity: the able support the unable, and the healthy support the sick, ensuring everyone has access to the same standard of care, be it outpatient or inpatient.

Crucially, Germany operates a unified system. Unlike our previous structure, there aren’t distinct insurance categories for different segments of the population, save for the option of Private Health Insurance (PHI) for high-income earners (currently above €73,000 annually).

Even then, PHI doesn’t automatically extend to dependents, unlike the Social Health Insurance (SHI), which covers family members, including children up to 18. Additionally, there is no further categorisation like in Kenya where one cadre is limited to public facilities while another, can access private or public.

The German SHI offers a comprehensive package of services with no limits on the range of care within a standardised framework known as Diagnosis Related Groups. This system not only standardises payments to hospitals but also incentivises quality and efficiency.

Read: Healthcare: Why you should prioritise medical insurance

For instance, hospitals are reimbursed based on the diagnosis, regardless of the length of stay, with penalties for premature discharge, thus focusing on effective treatment. For example, hospitals are penalised if a discharged patient is re-admitted within 30 days with the same condition.

The government’s role is policy and regulatory, with a self-regulating body, the Federal Joint Commission, overseeing the sector. Access is facilitated through a family doctor referral system, emphasising preventive care and requiring pre-approval from insurance providers for specialised services.

The success of UHC in Kenya through the SHA will hinge on our ability to learn from global best practices while crafting solutions that are tailored to our unique circumstances.

The benchmarking trip must be more than a symbolic gesture; it must be a catalyst for policy shifts that deliver on the true definition of UHC.

While the principle of mandatory contributions and the aim for universal coverage resonate with Kenya's UHC aspirations under the SHA, the structural and functional differences are significant. The NHIF, despite its challenges, had a long history.

Completely dismantling it, rather than building upon its foundations as Germany did over a century ago, presents a unique set of hurdles.

The proposal to benchmark with Germany raises questions about the direct applicability of their model to Kenya's context. Our current tariffs under the SHA are reportedly insufficient to cover the actual cost of care, particularly inpatient services in public hospitals.

Limiting rebates primarily to bed charges fundamentally contradicts the very definition of UHC, which demands access to a comprehensive range of quality services without financial hardship. Universality applies to coverage in terms of population and in terms of access to required services.

A system that covers everyone and guarantee access to every required service both inpatient and outpatient is what makes its truly UHC.

The President's commitment to covering those unable to pay must translate into tangible action. For the SHA to succeed in delivering true UHC, we need a standardized benefits package that genuinely addresses the healthcare needs of the majority.

The principle of solidarity must be at the core, ensuring that those contributing more do so to guarantee equitable access for all, regardless of their income. The move therefore to ensure those with higher income contribute more as with the case in Germany is laudable. Be that may be the case, the services offered must be seen to respond to the population needs.

The proposed benchmarking exercise offers a valuable opportunity for learning. However, the focus should not solely be on replicating a system rooted in a vastly different historical, economic, and social context.

Instead, the Kenyan experts should critically analyse the core principles that underpin Germany's UHC success – mandatory coverage, a unified system promoting equity, a comprehensive benefits package, and effective cost-containment mechanisms like DRGs.

Perhaps more immediately relevant lessons could be gleaned from countries with more comparable socio-economic landscapes that have made significant strides in UHC.

While Germany offers a gold standard, understanding how nations with similar challenges have navigated the path towards universal healthcare could provide more readily adaptable strategies for the SHA.

The writer is a Public Health Expert at Moi Teaching and Referral Hospital. He can be reached on; [email protected]