Can SHA Deliver Universal Care Without Breaking the Bank? – Health Business

Kenya is betting more than $1.5 billion on a sweeping overhaul of how its citizens pay for and receive healthcare, replacing its long-standing national health insurer with a three-tier financing system that officials say can bring the country closer to universal coverage without bankrupting the state.

The Social Health Authority, which replaced the National Hospital Insurance Fund, has collected 203.7 billion shillings ($1.56 billion) since its establishment and paid 178.4 billion shillings to healthcare providers, according to figures presented by senior health officials. The numbers are central to the government’s argument that the new system is financially viable despite persistent criticism over unpaid claims, registration and contribution rates.

But Kenya’s health reform faces a more fundamental test than how much money it has collected: whether enough Kenyans will consistently contribute to sustain a system built around shared financial risk.

The government has structured the new model around three funds—the Primary Health Care Fund, the Social Health Insurance Fund and the Emergency, Chronic and Critical Illness Fund—each intended to finance a different level of healthcare need.

At the bottom of the pyramid is primary healthcare, largely financed by the government. More complex treatment is expected to be financed through the contributory Social Health Insurance Fund, while the Emergency, Chronic and Critical Illness Fund is designed to provide protection when patients exhaust their ordinary benefits or develop conditions requiring prolonged and expensive treatment.

The architecture represents one of Kenya’s most consequential attempts to shift healthcare financing away from direct household payments and toward pooled funding.

The primary-care bet

The government’s economic case begins with primary healthcare.

Speaking at a Media Breakfast and Town Hall on the Kenya Health Sector ahead of the Kenya Health Summit 2026, under the theme ‘Reforms Delivered: Health as a Right,’ Dr. Mercy Mwangangi, Social Health Authority (SHA) Chief Executive Officer (CEO), explained that the state has allocated 27.4 billion shillings to the Primary Health Care Fund.

She argues that the investment in prevention and early treatment is intended to reduce the need for more expensive hospital care. The argument is based partly on World Health Organization estimates that investments in primary healthcare can generate significant economic returns by keeping people healthier and preventing illnesses from escalating.

“Primary Healthcare Fund is intended to address the financial inefficiency of a system in which patients often arrive at hospitals only after relatively manageable illnesses have become severe.”

She said that shifting care closer to communities is therefore not simply a public-health intervention but a cost-containment strategy.

However she further explained “The second tier, SHIF, works differently. Unlike the tax-funded primary-care component, it is fundamentally a contributory insurance pool,” adding that, “That distinction is important because the sustainability of the fund depends on people paying into it consistently.”

The contribution problem

Kenya has registered about 32.2 million people under the new system, according to SHA. But registration does not necessarily translate into regular contributions.

The government estimates that the country’s labour force has about 11 million economically active people, while the number making consistent contributions to SHIF is considerably smaller, at about 5 million.

That gap poses one of the biggest risks to the model.

Kenya’s economy has a large informal sector in which incomes can fluctuate sharply from month to month. Requiring workers whose earnings are irregular to make fixed insurance payments presents a challenge that cannot easily be solved through conventional payroll deductions.

“The government is responding with proxy means testing, which seeks to estimate household ability to pay using available socioeconomic information,” Mwangangi said.

She further explained that SHA is also considering an agency model in which agents would market and facilitate SHA enrollment and contributions, potentially creating a distribution network similar to those used by commercial insurers.

“But the economics of the approach remain uncertain. Expanding membership is one challenge; creating a culture of regular contributions among workers with irregular incomes is another.”

Digital claims and fraud controls

Dr. Mwangangi says its claims-processing system is now fully digital, eliminating the paper-heavy processes that characterized the former insurance system.

“Under the old model, claims officers worked through large volumes of physical documentation, creating opportunities for delays, manipulation and fraud. The new system is intended to provide a digital trail from the patient’s registration and treatment through to the claim submitted by a healthcare provider.”

Dr. Mwangangi says the system can identify unusual patterns in real time.

“One example involves the use of benefits by people who are not genuine dependents. Another involves facilities whose claims patterns appear inconsistent with normal clinical practice.”

She said the system can flag fraudulent claims and pointed to maternity claims as an example, saying facilities in which an unusually high proportion of deliveries are recorded as Caesarean sections can trigger scrutiny.

“Rejecting suspicious claims is not evidence of a failing insurance system but an essential part of protecting the fund.”

For hospitals, however, rejected or returned claims can create cash-flow problems and contribute to disputes over how much the SHA owes healthcare providers.

The claims dispute

County governments are currently owed about 4 billion shillings, according to the SHA, although healthcare providers have cited higher figures.

Mwangangi explained that some of the apparent debt represents claims that have been rejected or returned because of incomplete documentation, inconsistencies or suspected fraud.

If the system rejects legitimate claims too aggressively, hospitals can face financial stress and patients may ultimately bear the consequences. If it pays questionable claims simply to reduce arrears, the insurance pool could be exposed to fraud and unnecessary expenditure.

She says SHA has a contractual claims-aging period of 90 days and maintains that it is settling claims faster than many private insurers.

The dispute illustrates one of the central tensions in Kenya’s health-financing reform: financial discipline is necessary for sustainability, but excessive administrative barriers can undermine access to care.

The price of specialized care

That tension is particularly important for patients with chronic and complex illnesses.

The SHA benefit package establishes tariffs and eligibility rules for different categories of care. While the system is designed to provide greater financial protection, patients and healthcare advocates have raised concerns about limits, co-payments and restrictions attached to some specialized services.

For families requiring expensive procedures or prolonged treatment, the question is not simply whether they are registered with SHA. It is whether the package covers the full cost of the care they actually need.

This is where Kenya’s ambition to achieve universal health coverage will face its most difficult test.

Universal coverage is not measured simply by the number of people holding a health insurance registration. It is measured by whether people can obtain the services they need without being pushed into financial hardship.

A social contract under construction

According to Health Cabinet Secretary Aden Duale, Kenya has reached about 60.4percent of its UHC target, presenting the figure as evidence that the country is making progress toward a system in which healthcare is treated as a right.

But the remaining distance could be harder than the first steps.

The SHA must persuade millions of informal-sector workers to contribute regularly while maintaining public confidence that their contributions will translate into accessible and reliable care.

At the same time, it must pay hospitals sufficiently and promptly to keep them financially viable, while maintaining controls strong enough to prevent fraud and unnecessary expenditure.

And it must do all this while managing a health system in which demand for expensive chronic disease treatment, cancer care, surgery and critical care is rising.

The numbers so far offer grounds for optimism: 203.7 billion shillings collected and 178.4 billion shillings paid to providers is a substantial financial flow for a programme still in its early years.

But those figures alone do not establish long-term sustainability.

The harder question is whether Kenya can build a sufficiently large and reliable pool of contributors to finance the healthcare needs of a population whose expectations are rising faster than government resources.

That makes SHA more than an administrative replacement for NHIF. It is a test of Kenya’s willingness to move from paying for illness at the point of crisis to pooling financial risk before illness occurs.

The reform’s ultimate return on investment will therefore not be measured only in shillings collected or claims paid.

It will be measured in whether a Kenyan family can walk into a hospital, receive the care it needs and leave without having to choose between a medical bill and putting food on the table.