Kenya's Social Health Authority: Efficient at Registration, Failing at Service Delivery

Kenya registered 26 million people into its Social Health Authority within months of launch. Yet healthcare providers report 92% financial distress and only 27% of claims paid.

The Institute of Economic Affairs Kenya and UK International Development convened health policy experts in Nairobi to assess whether Kenya's SHA is working as intended. The briefing revealed fundamental challenges: the system's efficiency ends at enrollment, leaving a trail of unpaid claims, frustrated providers, and confused patients.

Challenge One: A Fragmented Three Fund Structure

SHA operates through three separate funds, each with different rules, eligibility criteria, and payment timelines. John Mutua explained this creates operational chaos.

The Primary Health Care Fund covers services at health facility levels 2 to 4, funded directly by government allocation. The challenge: When government budgets shrink or delay, primary care access collapses first. Facilities cannot plan staffing or supplies without predictable cash flow. A rural health center treating 200 patients per week depends entirely on PHC disbursements. A 60 day treasury delay means the center runs out of essential drugs and sends patients home untreated.

The Social Health Insurance Fund (SHIF) manages care at levels 4 to 6 through pooled contributions from formal and informal workers. The challenge: Only 4.8 million of 26 million registered members actually contribute. That is 18% funding the entire system. Claims submitted total Ksh 96.2 billion while payments reach only Ksh 53 billion. Private facilities report just 27% of submitted claims result in payment.

A private hospital submits 100 claims worth Ksh 5 million. After 90 days, it receives payment for 27 claims totaling Ksh 1.35 million. Staff salaries, medical supplies, and utilities still require full payment. The hospital reduces SHA patient intake or closes.

The Emergency, Chronic and Critical Illness Fund (ECCIF) addresses high cost care: accidents, cancer treatment, dialysis, intensive care. The challenge: Emergency care cannot wait for fund coordination. A traffic accident victim needs surgery, ICU care, and rehabilitation. The emergency surgery falls under ECCIF. Post operative care might fall under SHIF if at a level 5 hospital or PHC if transferred to level 4. The hospital submits three separate claims to three different systems with three different processing timelines. The patient's family pays out of pocket while waiting.

Challenge Two: The Public Private Mix Creates Inequality

SHA adopted a Public Private Mix model to leverage both public facilities and private providers. Mutua emphasized this is a very complex system. "Maybe it's not possible to have something that does not have differences or some gaps when you have something that is as complex."

The challenge: The PPM created unequal treatment rather than expanded access. Public hospitals receive priority in payment queues because they serve larger patient volumes and have direct lines to SHA administration. Private clinics and mid level facilities wait longer, receive less, and face higher rejection rates. This drives private providers out of the system, reducing access for enrolled members.

Challenge Three: Contribution Rates Do Not Match Enrollment Rates

Kenya achieved one of the fastest health insurance enrollment rates in Africa. Within 12 months, 26 million people received automatic registration via SMS using national ID and mobile phone databases.

The challenge: By August 2025, only 4.8 million registered members made contributions. The math does not work. Healthcare providers submitted Ksh 96.2 billion in claims but received only Ksh 53 billion in payments. That leaves Ksh 43 billion in unpaid claims on top of Ksh 24 billion in legacy NHIF debt.

Kenya's 18% contribution rate reflects a structural problem: most people work in informal sectors without regular salaries. Contribution systems designed for formal payroll deductions fail when 70% of workers earn daily or weekly cash. The system needed mobile money micropayments of Ksh 50 to 200 per week instead of monthly deductions of Ksh 500 to 1,000.

Challenge Four: Payment Delays Are Killing Providers

The challenge: Payment timelines vary by fund, ranging from 60 to 120 days compared to 30 to 45 days in single pool systems. Private clinics and mid level hospitals operate on tight margins. They cannot wait 90 to 120 days for reimbursement while still paying staff and suppliers immediately.

Result: 92% of providers report financial distress. Many limit SHA patient acceptance or exit the system entirely. This reduces access for the 26 million enrolled members.

Challenge Five: Administrative Complexity Drives Up Costs

The challenge: Administrative costs run 12 to 18% of total spending due to multiple fund systems, compared to 5 to 8% in consolidated models. Claim rejection rates range from 25 to 40% depending on which fund processes the claim, compared to 8 to 12% in unified systems.

Providers must navigate which fund covers which component of care. They submit multiple claims for the same patient episode to different systems with different rules. Patients face confusion about which fund covers what. Providers lack certainty because rules depend on facility level and fund type.

Challenge Six: Legacy Debt Undermines Trust

The challenge: The Ksh 24 billion NHIF debt was transferred to SHA but remains unpaid. Providers remember these unpaid bills and limit SHA patient acceptance accordingly. Starting a new system while carrying old debt destroys credibility before service delivery even begins.

The Numbers Tell the Story

NHIF Era

• 15 million active contributors

• 70% claim payment rate

• 45 day average payment timeline

• Ksh 24 billion in accumulated debt

SHA After 18 Months

• 26 million registered, 4.8 million contributing

• 27% claim payment rate for private providers

• 90 to 120 day payment timeline

• Ksh 24 billion legacy debt plus Ksh 43 billion new unpaid claims

• 92% of providers report financial distress

The system achieved high political visibility at launch but faces growing criticism as implementation gaps widen.

What These Challenges Mean

Mutua's analysis highlighted that Kenya's SHA demonstrates a pattern seen across Africa. Governments promise universal coverage. Donors fund digital registries. Politicians announce enrollment numbers at launch. Then the system stalls.

The challenge is not policy ambition. The challenge is operational design. When government auto enrolls millions and then fails to deliver care, trust collapses faster than it took to build the registry.

The IEA Kenya Chief Executive described receiving an automatic registration text message approximately one year before the briefing. The efficiency of that enrollment stood in sharp contrast to the service delivery experience that followed.

Addressing the Challenges

The analysis points to several areas requiring immediate attention.

Consolidate the fund structure. Every additional fund doubles administrative burden and triples confusion for both providers and patients. A single claims processing platform would allow providers to submit once regardless of which fund pays.

Fix payment timelines. A maximum payment period of 45 days across all funds would reduce provider exits. Establish an escrow or buffer fund equal to 60 days of average claims to protect providers during government budget delays.

Match contribution systems to how people work. Test mobile money micropayments rather than monthly payroll deductions. Partner with savings groups, cooperatives, and community health workers to collect contributions.

Stop celebrating enrollment numbers. Enrollment numbers mean nothing without service delivery. Track and publish monthly data on percentage of registered members making contributions, percentage of submitted claims paid within 45 days, average out of pocket spending per visit for enrolled members, and provider financial health.

Clear legacy debt. Clearing the Ksh 24 billion in old NHIF debts is not optional if the new system wants provider participation.

The Path Forward

The briefing made clear that universal health coverage requires more than universal registration. It requires sustainable financing, predictable payment flows, simplified administrative structures, and contribution mechanisms that match how people actually work and earn.

Kenya's SHA enrolled 26 million people efficiently. That achievement matters. But enrollment is only the first step. Service delivery is where universal coverage either works or fails. Right now, by the measures that matter to providers and patients, SHA is not working as desired.

The question facing policymakers is whether they will address these design challenges while the system is still new enough to fix, or wait until provider exits and patient dissatisfaction force a crisis redesign.