In sick economy, high medical bills drive families into poverty

A health-related crisis was the most frequent unexpected adversity that triggered a decline in the well-being of families last year, reveals a new study on financial access for households.

Overall, about a third (36 percent) of Kenyans experienced a shock, an unforeseen event that had a significant financial impact, in the 12 months preceding the survey done from October to December 2018.

Among those who faced hardships, most families (rural 55 percent and urban 59 percent) felt they were most financially impacted by major sickness or an accident-related injury.

Out-of-pocket payments prevent people from seeking healthcare in a country where one in four shillings spent on health is from personal funds

Kenyans were also affected by health misfortunes in a similar magnitude regardless of income and location, according to the survey conducted jointly by the Central Bank of Kenya, the Kenya National Bureau of Statistics and Financial Sector Deepening Kenya.

About a third of adults also reported going without medicine when sick, shows the study results, a revelation that may not be surprising to many people, considering the high cost of drugs and the low health insurance coverage in Kenya.

Out-of-pocket payments prevent people from seeking healthcare in a country where one in four shillings spent on health is from personal funds, according to World Bank figures.

Only one in five Kenyans enjoy some form of medical cover, which means that more than 38 million Kenyans are excluded from quality healthcare, according to data from the Kenya Integrated Household Budget Survey (KIHBS) 2015/2016.

The National Health Insurance Fund (NHIF) is the leading health insurer, covering more than 90 percent of the more than eight million Kenyans who have health insurance. About six percent of the insured are on plans facilitated by their employers.

Mr James Okoth, 52, is one of the Kenyans that dealt with a health-related shock in the past year. In August, Okoth noticed a lump on his right breast that was large enough to make him worry. A few days later he visited a private hospital in Kisumu for a check-up and a doctor recommended an ultrasound to confirm if it was a tumour. He was tested at a nearby diagnostic centre and paid Sh3,000 from his own pocket after learning that he did not have prior approval from NHIF that would have enabled him to use his card at the centre.

During a follow-up visit with the results, the doctor prescribed another test to find out if the tumour was cancerous. The test results that cost him Sh12,000 showed that it was indeed cancerous. “I was dazed and traumatised,” he recalls. The married father of four children, three in primary school and one in Form One, would soon find out that the treatment process would be financially draining.

He was referred to an oncologist, who prescribed a CT scan and another ultrasound on the abdomen and chest to check if the cancer had spread to other parts of the body. That cost him another Sh12,000, but this time there was some good news – the cancer was localised.

But the electrician, who on average makes about Sh40,000-Sh50,000 monthly from contractual electrical installation jobs and supplements it with the Sh40,000 he collects as rent from a few houses that he owns in Kisumu, was beginning to feel the financial pinch.

After the tests, the oncologist prescribed surgery to remove the right breast (mastectomy) followed by a core biopsy to determine the characteristics (grade and stage) of the tumour. NHIF covered the surgery but he paid Sh11,000 for the biopsy out-of-pocket.

Okoth also underwent immunohistochemistry tests to determine if the tumour was depending on hormones like oestrogen and progesterone to grow. This cost him Sh16,000

After the surgery, he stopped doing work because he was in pain. “The tests just kept coming and I had to turn to my brothers and sisters for help,” he says.

The 2019 FinAccess Survey 2019 shows that half of Kenyans rely on friends and family (social networks) to mitigate shocks and emergencies. This is followed by selling assets, livestock or crops (nine percent), savings or borrowing from formal institutions such as banks or microfinance institutions or saccos (eight percent), doing additional or better jobs (six percent), and mobile money and chama or savings groups (five percent each).

Okoth also underwent eight rounds of chemotherapy. Six were sponsored by NHIF before the cover reached the cap beyond which he had to solicit the help of his siblings to pay Sh55,000 for the last two sessions and an injection to boost his immunity.

The tests, drugs and chemo sessions cost a total of Sh109,000 on top of what was covered by NHIF.

“Chemo is rough, I had no appetite, I felt pain all over my body and suffered from severe headaches. The inner linings of my stomach and intestines thinned, making it impossible to eat certain types of food and my feet swelled, I lost weight and had no energy,” he recalls, his voice cracking.

With his income reduced by at least a half because he could not work, Okoth struggled to afford the balanced diet that he needed to get healthier. He also could not provide enough food for his family. When his daughter who excelled in last year’s Kenya Certificate of Primary Education exams was selected to join Form One, he again had to turn to his siblings for help to pay the fees.

At the beginning of this year, his last-born daughter, who is in Standard Two in a private school, reported to school late because she had to wait for him to raise school fees.

Since completing chemotherapy, Okoth has been on anti-hormone drugs that cost Sh6,000 a month and he will have to take them for at least five years. He is also due for radiology sessions, of which NHIF will cover 20. He hopes that the radiation oncologist will find that he needs no more than the sessions that are covered, because if he requires more he will have to pay for the rest from personal funds. The radio therapy will be done in Nairobi since no hospital in Kisumu offers the service.

Figures from the World Health Organization paint a grim picture of the health burden on Kenyans. Three in four Kenyans are at risk of falling below the poverty line because of direct out-of-pocket payments for surgical and anaesthesia care. About 1.5 million Kenyans are pushed below the national poverty threshold because they pay their medical bills from their own pockets, according to a recent peer-reviewed study by two Kenyan health economists, Mr Thomas Maina and Dr Jane Chuma.

Better insurance coverage

Where people live determines access to the various health services. For instance, the proportion of urban residents who are insured is more than double that of people living in rural areas. KIHBS figures show 29 percent of urbanites have health insurance compared to 13 percent of rural residents. Certain counties also have better insurance coverage than others, with Nairobi leading with 41 percent of its population insured. It is followed by Embu (33 percent), Nyeri (32 percent), Kirinyaga (29 percent) and Kajiado (28 percent). Twenty-nine counties have coverage rates below the national average of 19 percent. Wajir County has the lowest at 0.2 percent of the population covered. It is followed by Mandera (1.3 percent), Marsabit (1.7 percent), Garissa (2.7 percent) and West Pokot (2.9 percent).

Providing financial protection, such as medical insurance, from exorbitant out-of-pocket expenses is an important tool if a country’s health system is to ensure equitable access to care. A household without such protection may be forced to pay huge medical bills to treat an ailing family member, exposing it to financial catastrophe and impoverishment, according to the USAID funded Health Policy Project.

Overall, shocks seem to affect Kenyans in a more or less similar magnitude regardless of income level – lowest income category (38 percent), lowest middle (39 percent), middle (38 percent), second-highest (33 percent) and highest income (33 percent).

But Kenyans are not just struggling to deal with surprising events with financial repercussions. Their ability to meet day-to-day needs and work towards achieving life goals has declined, reveals the financial access survey. Nearly two-thirds of Kenyans are struggling to meet their daily expenses, with a third of them saying they have gone without food while three-quarters report struggling to make their money last through the income cycle.

The survey finds that four in five Kenyans are not financially healthy. This means that less than a fifth of Kenyans were financially healthy in 2018 compared to almost two-fifths in 2016.

An individual is considered to be financially healthy if he or she satisfies at least six of the flowing criteria: Saves for old age, sets aside money for investment, saves for the future, able to raise lump sum money within three days, never going without medicine when sick, never going without food, able to manage day-to-day needs, has a plan for allocating money and has no trouble making money last.

Generally, a majority of Kenyans feel that their financial status has worsened regardless of their sex, residence and marital status and the numbers bear them out. According to the survey, the share of financially healthy adults fell by 18 percentage-points from 2016, the proportion of people investing and saving for the future was cut by half while the ability to manage day to day shrank by eight percentage-points.