Employers reject health insurance scheme
Aug 23, 2007
The Federation of Uganda Employers has opposed the proposed National Social Health Insurance Scheme in its current form.
By Emmy Olaki & Charles Bwogi
The Federation of Uganda Employers has opposed the proposed National Social Health Insurance Scheme in its current form.
The Government, through the Ministry of Health, is planning to introduce a mandatory health insurance to be covered by an 8% salary contribution, equally shared between the employers and employees in the formal sector.
The ministry wants to establish a public parastatal, the Uganda Social Health Insurance Corporation, to administer the National Health Insurance Fund, a proposal that employers described as outrageous. “We are not against social health insurance and social security in principle. What we are against is the structure of the proposed scheme and the speed at which it is being undertaken by the Government,†said Aloysius Ssemanda, the federation’s former chairman, during a press conference in Kampala yesterday.
“History has proven that the Government cannot manage business. Our argument is that the proposed body should concentrate on regulation.â€
He pointed out that it would be a contradiction for a government to preach private sector-led growth while at the same time take on a key role in business.
He also wondered whether it was prudent to have employers and employees contribute to yet another social security scheme.
“Our concern is the kind of service we are going to pay for. Employers and employees are contributing 15% to NSSF and are not getting a lot of benefits. If the 15% is not used effectively, why do we have to add another 8%?†he asked.
NSSF pays 7% interest on workers’ savings, a figure below the inflation rate.
The executive director of the employers’ federation, Rosemary Ssenabulya, said the task force of the new health scheme had not done enough research or consultations. “Three quarters of the task force is composed of civil servants, basically leaving out the key stakeholders, the employers and the employees,†she said.
There was need to work closely with the private sector to establish the impact the scheme would have on their operations, she added.
“Ugandan employers are already burdened with high costs of doing business resulting from the high cost of power and taxes such as PAYE, NSSF and VAT.â€
Putting an additional burden on manufacturers, she said, would make Uganda not competitive as an employment destination.
She also wondered how the new scheme would impact on arrangements some employers have with private health insurance schemes.
“A number of employers have arrangements with insurance companies providing health insurance and health management, like IAA and AAR. A thorough study needs to be carried out to establish what would happen to these arrangements,†she said.
She noted that these private schemes were likely to collapse when the new scheme takes off.
The boss of the Uganda Insurers Association, Olli-Pekka Ruuskanen, warned of abuses of the system.
“Health insurance the world over is susceptible to abuse and fraud. Proper check systems have to be put in place before it is operationalised.â€
Other concerns raised were the absence of adequate health infrastructure to support the scheme in most parts of the country, and the fact that only the formal sector would foot the bill.
The formal sector in Uganda represents less than 20% of the total population.
The Federation of Uganda Employers has opposed the proposed National Social Health Insurance Scheme in its current form.
The Government, through the Ministry of Health, is planning to introduce a mandatory health insurance to be covered by an 8% salary contribution, equally shared between the employers and employees in the formal sector.
The ministry wants to establish a public parastatal, the Uganda Social Health Insurance Corporation, to administer the National Health Insurance Fund, a proposal that employers described as outrageous. “We are not against social health insurance and social security in principle. What we are against is the structure of the proposed scheme and the speed at which it is being undertaken by the Government,†said Aloysius Ssemanda, the federation’s former chairman, during a press conference in Kampala yesterday.
“History has proven that the Government cannot manage business. Our argument is that the proposed body should concentrate on regulation.â€
He pointed out that it would be a contradiction for a government to preach private sector-led growth while at the same time take on a key role in business.
He also wondered whether it was prudent to have employers and employees contribute to yet another social security scheme.
“Our concern is the kind of service we are going to pay for. Employers and employees are contributing 15% to NSSF and are not getting a lot of benefits. If the 15% is not used effectively, why do we have to add another 8%?†he asked.
NSSF pays 7% interest on workers’ savings, a figure below the inflation rate.
The executive director of the employers’ federation, Rosemary Ssenabulya, said the task force of the new health scheme had not done enough research or consultations. “Three quarters of the task force is composed of civil servants, basically leaving out the key stakeholders, the employers and the employees,†she said.
There was need to work closely with the private sector to establish the impact the scheme would have on their operations, she added.
“Ugandan employers are already burdened with high costs of doing business resulting from the high cost of power and taxes such as PAYE, NSSF and VAT.â€
Putting an additional burden on manufacturers, she said, would make Uganda not competitive as an employment destination.
She also wondered how the new scheme would impact on arrangements some employers have with private health insurance schemes.
“A number of employers have arrangements with insurance companies providing health insurance and health management, like IAA and AAR. A thorough study needs to be carried out to establish what would happen to these arrangements,†she said.
She noted that these private schemes were likely to collapse when the new scheme takes off.
The boss of the Uganda Insurers Association, Olli-Pekka Ruuskanen, warned of abuses of the system.
“Health insurance the world over is susceptible to abuse and fraud. Proper check systems have to be put in place before it is operationalised.â€
Other concerns raised were the absence of adequate health infrastructure to support the scheme in most parts of the country, and the fact that only the formal sector would foot the bill.
The formal sector in Uganda represents less than 20% of the total population.