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Uganda: Proposed law introduces payroll contributions for national health care system

Future of Work
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By Linah Sebunya | November 11, 2019

The bill would mean higher taxes for employees and higher labor costs for employers but would lower out-of-pocket spending for all Ugandans.

Employer action code: monitor

The Cabinet has approved a draft National Health Insurance Scheme (NHIS) Bill, intended to address financial strains in the current system and high out-of-pocket spending. The bill would require all adult residents to enrol in the NHIS, entitling them and their dependents to receive medical services based on the Minimum Health Care Package (MHCP). Currently, the government offers free health services at publicly run and financed health facilities, leaving Ugandans to resort to paying for private health facilities when required services are not available. This has resulted in high out-of-pocket spending, which reached 41% of total annual health expenditure in 2016/17 according to the Ministry of Health, while only 2% came from prepaid private spending.

Key details

Significant provisions of the bill include the following:

  • The NHIS would cover the entire population, including individuals in both formal and informal employment. The nonworking poor would be enrolled in stages as funding permits.
  • All formal employees age 18 or older would be required to contribute to the NHIS at 4% of gross monthly salary while their employer would contribute 1% of payroll. Workers in informal employment would be subject to a flat-rate monthly premium for coverage. Currently there is no specific contribution to fund government-provided health care.
  • Contributors and their dependents (spouse and children) would be entitled to benefits based on the MHCP. According to the published schedule, depending on the level of care provided by health facilities, the MHCP includes primary and preventive care, inpatient and outpatient services, surgical and reproductive health services, as well as radiological and laboratory services. The system would also provide mental health, dental and vision care.
  • Patients would not be subject to cost-sharing mechanisms for covered benefits; instead, health care providers (public and private) would contract for services with the NHIS based on agreed fee schedules, paid by the NHIS.

Employer implications

The new system would mean higher taxes for employees and higher labor costs for employers but should result in lower out-of-pocket spending and better health outcomes for the general population. There would be no option to contract out of the NHIS. The role of private health insurance (currently a popular and common employer-provided benefit) under the new system is still to be determined. Given the significant nature of the proposed changes, prospects for passage are uncertain, but the government has indicated its intention to pass the legislation by the end of the current parliamentary session (May 2020).

Author

Linah Sebunya
Kampala

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