March 23rd, 2016

Every month about 20 percent of Kenya’s population or 9 million people, experience an illness. About 7.8 million of these individuals will seek care at one of over 10,000 facilities in Kenya. And around 120,000 Kenyans will be hospitalized (2013 Kenya Household Health Expenditure and Utilisation Survey – KHHEUS). For both patients and providers, there is struggle in this churn of illness and care seeking – the uncertainty and worry that accompanies disease, the difficulty of finding money to pay for care, caring for patients when staff, medicines or equipment are in short supply, coping with the loss of a loved one.

FSD’s latest report, “Struggling to thrive: How Kenya’s Low-Income Families (try to) pay for health care” illuminates this struggle and explores how families that live in or near conditions of poverty manage illness, seek care and pull together the money needed to pay health care providers. The report was motivated by the recurring and often moving stories from the year-long Financial Diaries study of ordinary people failing to get the right care at the right time, often with devastating consequences.

Over the course of a year, illness episodes requiring outpatient care are a fact of life for families in Kenya and more severe health emergencies requiring hospitalization are not as infrequent as families might expect. To understand the financing challenge faced by households with scarce and uncertain incomes, it is helpful to take a step back and understand the two fundamental healthcare financing challenges faced in this context. The first is having “rainy-day” savings – surplus income stored in an accessible place so that it is “on-hand” to pay for any out-of-pocket expenses associated with the care-seeking process (e.g. transportation, co-pays, consultation fees, medications etc.). The second is having some kind of mechanism to pay for medical emergencies or treatment of diseases that require hospitalization. Hospital admissions are rare but costly, and can easily outstrip a family’s financial wherewithal.

How well are low-income Kenyan families prepared to deal with the first financing challenge? The Financial Diaries study found that while families do save (financial assets were about a month of income at the median), they save to invest. In order to protect their investment savings, they place that money in harder to access “illiquid” financial instruments such as savings groups. The study found that the amount of liquid savings the median family might have was on the order of Ksh 500. Turns out, this is about enough to finance a single visit to an outpatient care provider especially if the patient qualifies for free care (e.g. children and expecting mothers) or if the visit is at a government owned health dispensary or health center where user fees were abolished under a new policy. In 2013, out-of-pocket expenses on outpatient care at the median were KSh 50 per visit or Ksh 250 per visit if free care is excluded. This data suggests that low income Kenyans are moderately well prepared for low-cost, high frequency illness events but they still face challenges for a few different reasons: Fifty percent of outpatient visits made by the poorest 20% of Kenyans occur at private providers or public hospitals where charges are still levied, and in public primary-care facilities where drug stock-outs occur, people need to purchase medicines at private pharmacies, and drug costs are often expensive relative to the incomes of the poor. These costs coupled with the liquidity constraints described earlier can deter health seeking: 38 percent of the households in the Financial Diaries sample reported delaying or foregoing care over the course of a year.

Another major challenge documented in the report is the snowballing of spending that occurs when people receive poor quality care. Misdiagnoses or incorrect treatment prolong illness episodes and cause families to repeatedly visit different providers for consultations, tests and alternative treatments. In addition, the poor do not have the insulation a job with a formal company affords, so the more time spent “searching” for quality care, the more income they could be earning from their labor that is lost. When asked about a series of 22 financial risks, 14 percent of adults nationwide reported that “large medical costs due to family member’s ill-health” had the biggest impact on household income.

How about the second financing challenge? Because most reading this post will have pre-paid for inpatient care through premium payments for health insurance or taxes, you don’t need to worry about the financial implications of being rushed to the hospital in the event of an emergency. In Kenya, only 7 percent of the poorest 40 percent of the population are covered by the National Health Insurance Fund (2015 FinAccess), which covers hospital expenses for paying members. As health care costs rise, the poor turn to their social network for assistance or, more damagingly, resort to selling assets to finance care. Among the poorest 40% of Kenyans, when faced with large medical costs due to a family members illness, 33 percent reported using up savings to deal with the event, 37 percent reported getting help from family members and 10 percent reported selling assets such as vehicles, business or household goods or livestock (2015 FinAccess).

Ordinary Kenyans are vastly unprepared for medical emergencies that require large outlays. Every year, about 12 percent of households will need to take a family member to the hospital for care. The 2013 KHHEUS found the average total out-of-pocket spending per hospital admission was about Ksh 11,110 and in 15 percent of admissions the required spending was in the range of Ksh 60,000. Data from the 2015 FinAccess survey suggests that many families would not be able to finance care at those levels if the money was needed urgently: 64 percent of rural household heads and 55 percent of urban household-heads reported that they would not be able to raise Ksh 2,500 and Ksh 6,000 within three days in the event of an emergency. As the story of Isaac and Monicah – two participants of the Financial Diaries illustrates – the consequence of failing to raise money quickly can be a matter of life and death. While the full story is shared in the report, the couple was not able to raise Ksh 23,000 (about USD 250) for a surgery that could have been life-saving. Monicah died waiting for the funds to arrive.

Kenya has made great strides in improving key health outcomes for its population in the last decade, and the Kenyan government is pursuing policies to make primary care more affordable. The objective of this report is to highlight opportunities to accelerate both of these trends and to identify ways both the public and private sector can make it easier for low-income Kenyans to pay for care so that there are more happy health endings when illness strikes.

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