How Kenya’s New System Is Losing Billions and What the Government Is Doing
Kenya’s Social Health Authority (SHA) was launched to replace the corruption-plagued NHIF and deliver universal health coverage. But within months, SHA is bleeding billions through fraud, fake hospitals, and weak oversight. This article explains what went wrong, the government’s response, and what it means for Kenyans.
What Is SHA and Why Was It Introduced?
In October 2024, Kenya introduced the Social Health Authority (SHA) to replace the National Health Insurance Fund (NHIF). The NHIF had long been criticized for mismanagement, fraud, and poor service delivery. The SHA was marketed as the fresh start Kenyans needed—built on three new funds:
- Primary Healthcare Fund (PHF): To support basic healthcare at the community level.
- Social Health Insurance Fund (SHIF): For inpatient and outpatient cover.
- Emergency, Chronic, and Critical Illness Fund (ECCIF): To cushion families facing high-cost medical emergencies.
The vision was clear: create a modern, transparent system to deliver universal health coverage (UHC). But just months later, SHA is making headlines for the wrong reasons.
Billions in Fake Claims
According to official figures, SHA received claims worth KSh 82.7 billion between October 2024 and mid-2025. Out of this:
- KSh 10.6 billion was rejected outright due to fraudulent claims.
- KSh 2.1 billion is still under investigation.
This means billions of taxpayer funds meant for healthcare may have been lost to fictitious claims. Instead of fixing NHIF’s legacy of corruption, SHA appears to be repeating history.
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Phantom Facilities and Questionable Payouts
Investigations have revealed shocking cases:
- Walalaha Nursing Home Limited: Registered in February 2025, but somehow approved for SHA payments a month earlier. It allegedly received KSh 2 million in June before being suspended.
- Ladnan Hospital: Though classified as a Level 3 outpatient clinic, it reportedly received KSh 195 million from SHA since late 2024. Critics argue such a facility should not be handling that scale of funds.
In total, 85 health facilities have been suspended, with their payments frozen, for inflating bills, falsifying services, or being registered under dubious circumstances.
Government Response: Crackdown Under Taifa Care
Health Cabinet Secretary Aden Duale has acknowledged the crisis. He insists the government is taking a hard line against fraud under the Taifa Care program, which promises “an uncompromising stance against corruption in healthcare.”
SHA CEO Mercy Mwangangi has published gazette notices listing suspended facilities. Payments to these clinics are withheld pending investigations. While these actions signal intent, critics argue that fraud has already taken root because controls were weak from the start.
Auditor-General’s Concerns
A March 2025 report from Auditor-General Nancy Gathungu raised further alarms. She revealed that the government had already injected KSh 104.8 billion into the SHA system—yet the intellectual property (IP) behind its technology platform was not fully owned by the state. This means the government risks pouring money into a system it does not fully control.
The report also highlighted loopholes in registration, oversight, and payment processes, warning that without urgent reforms, SHA would suffer the same fate as NHIF.
Voices of Concern
Civil society groups, professional associations, and former public officials have expressed deep concern. Former Chief Justice David Maraga warned that corruption in health insurance not only wastes public funds but denies millions of Kenyans access to life-saving care. He urged the government to ensure full accountability and prevent cover-ups.
Health experts have recommended:
- Returning to capitation models (fixed payments per patient to hospitals) that discourage inflated billing.
- Strengthening primary healthcare funding, which is more cost-effective.
- Introducing real-time digital audits of claims to flag suspicious patterns before payments are made.
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Why This Matters for Kenyans
The SHA scandal is more than just another corruption story—it directly affects millions of families.
- Loss of Public Trust: Many Kenyans are now questioning whether SHA is truly different from NHIF.
- Misuse of Taxes: Billions collected through payroll deductions and public contributions are being misused.
- Strain on Health Services: Funds that should buy medicines, pay doctors, and improve hospitals are being diverted.
- Risk to Universal Health Coverage (UHC): Without trust and financial stability, Kenya’s goal of affordable healthcare for all may collapse.
Government’s Challenge: Restoring Tenacity
The government’s biggest challenge is proving that SHA can still work. That will require:
- Tighter regulation of health facilities before they are accredited.
- Independent oversight to prevent conflicts of interest.
- Public transparency, including publishing all payments made to facilities.
- Swift prosecutions of fraudsters to deter future abuse.
The fight for tenacity will not be easy. But without it, SHA risks becoming another failed experiment in Kenya’s long struggle for healthcare reform.
Conclusion
The Social Health Authority was born to cure the failures of NHIF—but it is already showing the same symptoms: fraud, loopholes, and mistrust. Billions are bleeding away from public healthcare, leaving ordinary Kenyans vulnerable.
The government has suspended dozens of facilities and promised an uncompromising fight against fraud. Still, unless structural reforms are introduced, Kenyans may continue paying into a broken system.
For SHA to succeed, transparency and accountability must be more than promises. They must become the backbone of Kenya’s health insurance future.
