Kenya Social Health Authority is facing mounting financial pressure after data showed only five million of its 29 million registered members are actively contributing, raising concerns over sustainability of universal health coverage.
Kenya Social Health Authority is under increasing scrutiny as a widening gap between contributions and payouts threatens to destabilize the country’s healthcare financing model.
Figures from the authority show that for every KSh1 contributed by informal sector members, more than KSh26 is paid out in claims. This imbalance has continued to worsen in 2025, pushing the informal sector loss ratio from 1,922% in January to 2,655% by June.
The authority’s claims settlement rate currently stands at 74%, below its 85% target. At the same time, Kenya Social Health Authority aims to achieve 85% population coverage, translating to about 43 million Kenyans, with an estimated average household contribution of KSh14,090 required to sustain the system.
Chief Executive Officer Mercy Mwangangi said the current contribution levels are insufficient to meet growing healthcare demands.
“If we were to even reduce this 2,655% to 200%, I would not have enough resources to pay out,” she said during a parliamentary engagement.
Informal sector remains the weakest link
The biggest challenge facing Kenya Social Health Authority lies within the informal sector, which accounts for 83% of the country’s workforce, according to the Kenya National Bureau of Statistics.
Unlike salaried workers whose contributions are deducted directly by employers, informal workers are required to remit payments voluntarily. However, many have either stopped contributing or only enroll when they need medical services.
This trend undermines the fundamental principle of insurance, where consistent contributions from healthy individuals support those requiring care.
Rural and Urban Private Hospitals Association chairman Brian Lishenga said the rollout of the scheme lacked sufficient public awareness, particularly on the benefits package available to informal sector members.
“Convincing millions of Kenyans who earn irregular incomes and have competing financial priorities to contribute consistently was never going to be simple,” he said.
He added that weak enforcement mechanisms and lack of formal identification documents among vulnerable populations have contributed to high default rates.
For many low-income households earning about KSh10,000 per month, the minimum annual contribution of KSh6,000 remains a significant financial burden, often competing with essential expenses such as rent, food and education.
Structural issues echo past failures
The current crisis mirrors challenges that led to the collapse of the National Health Insurance Fund, which struggled with mismanagement, fraud and an unsustainable benefits structure.
Under the previous system, only 22% of informal sector members actively contributed against a target of 74%. Many would enroll, access healthcare services and then stop paying, leaving the fund unable to meet its obligations.
Kenya Social Health Authority was introduced to address these weaknesses through a restructured financing model comprising three separate funds.
These include the Social Health Insurance Fund for inpatient and specialized care, the Primary Healthcare Fund financed by the government, and the Emergency, Critical and Chronic Illness Fund.
Each fund operates independently, with strict legal provisions preventing the transfer of resources between them.
“There is no commingling of funds. The law expressly prohibits moving money from one fund to another,” Mwangangi said.
Surplus claims questioned amid delayed payments
Despite the challenges, Kenya Social Health Authority maintains that it is operating at a surplus. The authority reports having collected KSh159.34 billion and disbursed KSh122.34 billion, resulting in a net operating surplus of KSh36.99 billion.
However, healthcare providers have raised concerns over delayed reimbursements, with some hospitals reporting payment delays of up to three months, involving billions of shillings.
Seme Member of Parliament James Nyikal, who chairs the National Assembly Departmental Committee on Health, questioned the reliability of the surplus figures.
“A surplus on paper means little if funds remain insufficient in critical areas and outstanding debts are not settled,” he said.
Nyikal noted that while the overall design of Kenya Social Health Authority is sound, its implementation requires urgent improvements and stronger coordination among stakeholders.
Health sector future at risk
Experts warn that without a significant increase in active contributors, particularly from the informal sector, Kenya’s universal health coverage ambitions may not be realized.
The government has acknowledged that voluntary contributions alone are unlikely to achieve the desired coverage in an economy dominated by informal employment. However, a clear enforcement strategy has yet to be fully implemented.
Nyikal emphasized the need to build a culture of prepayment for healthcare to ensure sustainability.
“If people wait until they are sick to register and pay, then immediately incur huge costs, where does the money come from?” he said.
He added that rebuilding public trust, simplifying contribution processes and strengthening enforcement mechanisms will be critical in reversing the current trend.
Until then, the gap between registered members and active contributors is expected to remain a major obstacle, leaving the future of Kenya Social Health Authority uncertain and the goal of universal healthcare still out of reach.
