NHIF Tanzania: A Look Back and Forward…

In December 2023, President Samia Suluhu of the Republic of Tanzania passed into law the Universal Health Insurance Bill, a piece of legislation aimed at guiding the nation to achieving Universal Health Coverage, and protecting its population from catastrophic health expenditure. This law is widely expected to expand the footprint and benefits offered by the National Health Insurance Fund (NHIF).

A while back, I had written an article looking at the private health insurance ecosystem in Tanzania. To provide appropriate context, here is a comparison of economic indicators for Tanzania and its neighbors, Kenya and Uganda:

Background of NHIF Tanzania

The NHIF Tanzania was established by Act of Parliament No. 8 of 1999, and started operations in 2001. It is a government entity that operates under the Ministry of Health.

The fund was initially intended to cover public servants, including government employees and their dependents, but has expanded its coverage over the years to include other groups such as private sector employees, students, and informal sector workers. The fund provides a comprehensive benefit package, including outpatient and inpatient services, drugs, diagnostic tests, surgeries, and maternal health services.

According to the NHIF Act, employees in the public sector are obliged to contribute to the Fund a total of six percent (6%) of their monthly basic salary; equally shared between the employer and employee. However, the Fund has put in place separate contribution arrangements for other groups that join the Fund voluntarily. These are all organized into 11 different benefit packages as of June 2022.

This article aims to look at the recent performance of the NHIF and enable an understanding of its main strategies..

Strategic Plan

During the period from 2015 to 2020 the Fund intended to achieve the following?

corporate objectives as part of its strategic plan:

• To increase membership coverage from 26% to 50% of the population
• To increase contributions collection annual growth rate from 12% to 15%?
• To improve accessibility and quality of services to beneficiaries and providers
• To increase efficiency of claims reimbursement from average aging of 70 to 30 days
• To re-engineer the Fund’s business process and automation
• To increase investment income to an average growth rate of 14%
• To enhance human resources capabilities and staff welfare, and;
• To undertake risk management and ensure sustainability of the Fund.??

Performance so far..

Let us have a look at how the NHIF has performed so far.

NHIF Tanzania has 3 main sources of revenue as follows:

• Member contributions: these are dependent on the different packages?
• Investment income: NHIF invests funds in equities, government securities, money market instruments, properties, loans to health facilities, and government guaranteed projects
• Other income

These revenues have grown from TZS 369 billion (USD 140 million) in 2014 , almost doubling to TZS 624 billion(USD 235 million) in 2022.

Over the same period, the fund received 82% of its revenues from contributions, and a further 17% from investments it has made. A majority of these investments have been in loans to healthcare facilities (~20%), term deposits (~13-32%), government securities (~31-56%), equities (~15%) and corporate bonds (~1%).

The loans provided to healthcare facilities have been of 3 types:

• Medical Equipment Loan - to purchase required, approved medical equipment
• Facility Improvement Loan - to improve infrastructure and systems
• Medicine Loan - to procure required medicines

These loans are of considerable interest because it would mean that the social payer is also involving itself in activities to improve the health ecosystem and its financing beyond just paying for hospital claims.

Membership

NHIF membership has markedly increased from as far back as 2001, with the number of principal members increasing eight times from its inception. The numbers of principal members and beneficiaries are as shown below:

As of 2022, the fund has 1.3 million principal members and a total membership of 4.8 million individuals, representing 7.3% of the population of Tanzania. These members sign up for a number of schemes that have defined groupings, mostly based on economic activities as follows:

The principal membership is distributed across the schemes as follows:

From the above, approximately half of principal membership is from government employees, though this ratio has been declining in recent years to 42% in 2022. Students form approximately 25 % of the membership and private formal employees form 10% of the entire cohort. Students and children might have double insurance since the Toto Afya cover is non-discriminatory for all those under 18 years. It is unclear from the data whether there is an opt out option for Toto Afya in favor of the Student scheme once one starts attending formal education.

Claims

NHIF Tanzania has been running at a surplus. These payouts are to faith-based, private or government owned facilities as follows:

Approximately 30% of payouts are made to government owned facilities, with a similar amount to faith-based facilities, and 40% of payouts are made to privately owned healthcare facilities.

The claims are also made out for a varying number of reasons summarized below:

Slightly above 40% of payouts are for medicines, with slightly under 20% being for investigations and 14% going to pay for consultation fees. Procedures take up 10% of claims and surgeries only 6% of the claims. These numbers are more or less constant across the years.

Conclusion

The UHI Act (2023) switches to mandatory contributions from Tanzanians in a bid to raise more revenue for health. This mandatory aspect will be the hardest to enforce given that informal labor arrangements are often characterized by unpredictable and irregular incomes, and the monies are often not collected in structured ways. The act provides for penalties for failed remittances with an interest rate of up to 10% per annum.?

The act also seeks to tap into additional sources of funds through earmarked taxes on electronic transaction fees and from excise duty on alcohol, carbonated drinks, and cosmetics.

From an operational standpoint, the act seeks to consolidate the various schemes into a single pool, allowing cross subsidization and better risk pooling, with all the formed schemes being placed under the eye of the regulator, Tanzania Insurance Regulatory Authority (TIRA).

This new act will reform the NHIF and its operations plus benefit packages and is a huge leap forward on the steps being taken to achieve UHC for Tanzania.

References

Buguzi, S. (2024). Financing Tanzania’s universal health insurance. The Lancet, 403(10424). https://doi.org/10.1016/S0140-6736(24)00133-8?

LLP, C. & C. (2023, March 17). The Universal Health Coverage Bill of 2022 in Tanzania. Clyde & Co LLP. https://www.clydeco.com/en/insights/2023/03/universal-health-coverage-bill-2022-tanzania?

Mori, A. T. (n.d.). Frontiers. Frontiers in Health Services, 3. https://doi.org/10.3389/frhs.2023.1247301?

National Health Insurance Fund. (n.d.). Home. National Health Insurance Fund. Retrieved June 29, 2024, from https://www.nhif.or.tz/#gsc.tab=0?

NHIF. (2021). Mfuko wa Taifa wa Bima ya Afya. In NHIF Afya Njema. NHIF. https://www.nhif.or.tz/uploads/publications/en1634553442-NHIF%20AFYA%20NJEMA%20SEPTEMBA%202021.pdf?

Profile. (n.d.). National Health Insurance Fund. Retrieved June 29, 2024, from https://www.nhif.or.tz/pages/profile#gsc.tab=0?

Publications. (n.d.). National Health Insurance Fund. Retrieved June 29, 2024, from https://www.nhif.or.tz/publications/26#gsc.tab=0?

Tanzania enacts the Universal Health Insurance Bill. (2023, December 7). P4H Network. https://p4h.world/en/news/tanzania-enacts-the-universal-health-insurance-bill/?

Tanzania’s Universal Health Insurance Act 2023: Implications on health financing. (2024, February 19). Strategic Purchasing Africa Resource Centre (SPARC). https://sparc.africa/resource/tanzanias-universal-health-insurance-act-2023-implications-on-health-financing/?

Wambura, B. (2023, December 6). Samia assents to Universal Health Insurance Bill. The Citizen. https://www.thecitizen.co.tz/tanzania/news/national/samia-assents-to-universal-health-insurance-bill-4454922??