The Social Health Authority (SHA) is facing a looming financial crisis after a new report revealed a massive deficit of Ksh 166 billion, raising fears over the sustainability of Kenya’s public health insurance system. The report, published by the Institute of Economic Affairs (IEA), warns that unless urgent corrective measures are taken, the insurer could face operational collapse, putting millions of Kenyans at risk of losing access to affordable healthcare.
SHA was introduced following the dissolution of the National Hospital Insurance Fund (NHIF) as part of the government’s broader healthcare reforms aimed at achieving Universal Health Coverage (UHC). The transition was expected to improve efficiency, accountability, and access to health services. However, the IEA report indicates that the new authority has inherited deep structural weaknesses while also facing new financial pressures.
According to the report, the Ksh 166 billion deficit is largely driven by a mismatch between contributions and healthcare expenditure. While the number of Kenyans seeking medical services has increased, contributions—especially from the informal sector—remain low and inconsistent. This imbalance has significantly strained SHA’s ability to meet its financial obligations.
The report also highlights high administrative and operational costs as a key concern. IEA notes that a significant portion of SHA’s revenue is absorbed by operational expenses, leaving insufficient funds to settle claims from hospitals and healthcare providers. Governance challenges, inefficiencies, and weak financial controls have further worsened the situation.
Healthcare facilities across the country are already feeling the impact. Many hospitals have reported delays in reimbursement, with some facilities waiting several months for payment. As a result, some hospitals have scaled down services, postponed procurement of medical supplies, or asked patients to pay out of pocket. Health sector stakeholders warn that continued delays could lead to medicine shortages, unpaid healthcare workers, and declining quality of care.
The report warns that the collapse of SHA would have far-reaching consequences, particularly for low-income households that rely heavily on public health insurance. Millions of Kenyans could be forced to bear the full cost of medical care, increasing the risk of households falling into poverty due to medical expenses.
IEA has urged the government to take immediate steps to stabilize SHA. Among its recommendations are a review of the contribution structure, improved collection mechanisms for the informal sector, reduction of unnecessary operational costs, and strengthening of governance and accountability systems. The report also calls for short-term government financial support to address the deficit while long-term reforms are implemented.
Health policy experts have emphasized the need for transparency to rebuild public trust in the system. They argue that clear communication on how funds are managed and how reforms will protect contributors is essential for the success of SHA.
By the time of publication, the government had not issued a comprehensive response to the IEA report. However, pressure continues to mount from healthcare providers, policy analysts, and the public for swift action.
As Kenya continues its push toward universal health coverage, the future of the Social Health Authority remains uncertain. Without urgent reforms and adequate funding, the Ksh 166 billion deficit could undermine the country’s healthcare system and reverse gains made in expanding access to medical services.
SHA was introduced following the dissolution of the National Hospital Insurance Fund (NHIF) as part of the government’s broader healthcare reforms aimed at achieving Universal Health Coverage (UHC). The transition was expected to improve efficiency, accountability, and access to health services. However, the IEA report indicates that the new authority has inherited deep structural weaknesses while also facing new financial pressures.
According to the report, the Ksh 166 billion deficit is largely driven by a mismatch between contributions and healthcare expenditure. While the number of Kenyans seeking medical services has increased, contributions—especially from the informal sector—remain low and inconsistent. This imbalance has significantly strained SHA’s ability to meet its financial obligations.
The report also highlights high administrative and operational costs as a key concern. IEA notes that a significant portion of SHA’s revenue is absorbed by operational expenses, leaving insufficient funds to settle claims from hospitals and healthcare providers. Governance challenges, inefficiencies, and weak financial controls have further worsened the situation.
Healthcare facilities across the country are already feeling the impact. Many hospitals have reported delays in reimbursement, with some facilities waiting several months for payment. As a result, some hospitals have scaled down services, postponed procurement of medical supplies, or asked patients to pay out of pocket. Health sector stakeholders warn that continued delays could lead to medicine shortages, unpaid healthcare workers, and declining quality of care.
The report warns that the collapse of SHA would have far-reaching consequences, particularly for low-income households that rely heavily on public health insurance. Millions of Kenyans could be forced to bear the full cost of medical care, increasing the risk of households falling into poverty due to medical expenses.
IEA has urged the government to take immediate steps to stabilize SHA. Among its recommendations are a review of the contribution structure, improved collection mechanisms for the informal sector, reduction of unnecessary operational costs, and strengthening of governance and accountability systems. The report also calls for short-term government financial support to address the deficit while long-term reforms are implemented.
Health policy experts have emphasized the need for transparency to rebuild public trust in the system. They argue that clear communication on how funds are managed and how reforms will protect contributors is essential for the success of SHA.
By the time of publication, the government had not issued a comprehensive response to the IEA report. However, pressure continues to mount from healthcare providers, policy analysts, and the public for swift action.
As Kenya continues its push toward universal health coverage, the future of the Social Health Authority remains uncertain. Without urgent reforms and adequate funding, the Ksh 166 billion deficit could undermine the country’s healthcare system and reverse gains made in expanding access to medical services.
