Lawmakers Condemn SHA’s “One-Year Premium” Rule as “Extortion of the Poor”

 What’s at Stake

The Social Health Authority (SHA), which replaced NHIF in October 2024, requires households—particularly in the informal sector—to pay a full year’s contributions upfront before gaining access to benefits under its Social Health Insurance Fund (SHIF). Critics say this model is insensitive to the realities of low-income Kenyans and amounts to “collecting first, caring later.” 

Lawmakers Sound Off

Senator Omtatah described the requirement as “extortion—not healthcare reform,” arguing that:

• Many Kenyans lack the cash to pay full annual premiums.

• Healthcare should not begin with a heavy financial burden, especially when public facilities remain poorly resourced. 

• Omtatah emphasized the constitutional right to affordable healthcare and said contributions should be aligned with ability to pay.

Senator Muthu Muhia joined the call for reform, pointing out that while MPs enjoy smooth automatic deductions and medical coverage, ordinary citizens often struggle to access care despite paying upfront. “What happens to the seven months you already paid for?” he asked, referencing ongoing delays in service delivery. 

The Scale of the Issue

• Formal sector workers (around 3.5 million salaried employees) are automatically deducted 2.75% of gross salary monthly, making them the backbone of SHA funding.

• Meanwhile, informal sector households, who make up more than 80% of Kenya’s workforce, struggle with annual lump-sum payments. Only about 400,000 informal households remain compliant. 

• Roughly 23 million registered Kenyans, but only around 5 million make regular contributions—raising concerns about sustainability. 

 Legal and Administrative Pressure

• The High Court recently ruled the mandatory 2.75% deductions unconstitutional, calling them a violation of tax laws and an instance of double taxation. 

• Meanwhile, SHA continues to enforce compliance: employers are required to remit contributions by the 9th of each month or face penalties—up to Ksh 2 million or three years’ jail time. Employees of non-compliant organizations risk losing access to health services. 

• Payment delays are also hurting health facilities: only 20% of PHC‑model hospitals had received full SHA reimbursements in recent months, and many are borrowing or defaulting. 

 Why the Controversy Matters

What Lawmakers Are Demanding

1. Immediate repeal of the full‑year payment rule and creation of flexible contribution models aligned with cash‑flow realities.

2. Review of penalties for informal sector default, ensuring households are not criminalised.

3. Faster public participation—the Social Health Insurance Bill was pushed through with minimal input, fueling protests that legislation has become unrepresentative. 

 Final Insight

Oversight bodies are warning: Kenya’s health insurance model risks alienating the very population it seeks to protect. By prioritizing upfront revenue over equitable access, SHA may be undermining its own mandate. With legal uncertainty swirling and parliamentary pressure mounting, the question is not whether reform is needed—but how swiftly it can be enacted to ensure the system serves, rather than punishes, the poor.