The case of the National Health Insurance Fund

Pioneering Social Health Insurance in Tanzania

Von Emmanuel Humba

The National health Insurance of Tanzania, being an established and effective health financing option, a pioneer of Health Insurance in Tanzania resolved to undertake various interventions since 2001 to date in order to ensure improved access. The improvements have not only benefited the members but also the wide network of accredited health service providers and the general population at large.

Health Insurance and social security are Human or Constitutional Rights in most of the sub-Saharan Africa countries. Some countries in this region have even gone further to realize and include Health Insurance in their elections manifesto of the respective Ruling Parties (i.e. Tanzania, Uganda).

Most sub-Saharan African countries offer health services through the following financing systems; Government Funding, Health Insurance Schemes, Private, Community and micro- insurance, initiatives which are unfortunately not linked to address the poor and the disadvantaged in the population.

As a result:
• 80% of the population South of Sahara is denied of adequate health;
• More than 50% of the population in the Region are living on less than 1 $ a day;
• More than half of health spending in poor countries is through out-of pocket payments;
• Developing countries account for about 84% of the global population of whom 90% of the Global disease burden while their budgetary allocation for health is only 12%;

Tanzania: Socio-Economic Indicators

Since independence in 1960, Tanzania has continued to be mainly an agricultural country supported by mining, tourism and trade. The Agricultural Sector employs about 80% of the working population, who mostly live in the rural areas. The agricultural sector is still underdeveloped and heavily dependent on the seasonal weather changes. Farming practices are still underdeveloped and the productivity low. The sector is currently being revamped through an initiative known as Agriculture First (Kilimo Kwanza).

The rural population engaged in peasantry farming is mainly covered by the Community Health Funds, established by Local Councils in the respective Districts as a pre-payment health insurance scheme. Those who are not covered by the Community Health Funds are required to pay a nominal fee at a point of accessing health care services.

The country’s GDP in the 2009/2010 FY was 5.5 % while the inflation rate was 5.6% as of December. The ratio of government health expenditure to total Government budget in 2010/2011 was 12.2%, being a third in the priority list and lower than what was agreed in the Abuja Declaration.

Population, demographic and other indicators

The Tanzanian population was estimated to have reached 40 million by June 2009. This is a growth rate of 2.9 %. The demographic structure shows that the majority of the population comprises of young people of whom more than 44% are below 15 years of age and projected to increase slightly. Elderly population aged 60 years and above, constitute 5% of the total population. The population aged between 15 and 59 years (about 52%) constitutes the country’s labour force.

It is estimated that less than 10% of the total workforce is engaged in formal wage employment and as a result, the informal sector is an important source of employment and income generation.

The main causes of morbidity and mortality in Tanzania are Malaria, Tuberculosis, Cholera, HIV/AIDS and its related diseases. Malaria has been the leading cause of morbidity and mortality in Tanzania. It is estimated that 93.7% of Tanzanians are at risk of contradicting diseases with malaria itself affecting more than 16 million people each year. About 14 million people (42%) live in areas where malaria transmissions and endemicity rates are high throughout the year. Pregnant women and young children who have not yet developed immunity are more vulnerable and these have higher malaria mortality rates, high level of anaemia and low birth weights.

A quick survey on other important indicators shows that the general Life expectancy stands at 53 years and 56 years for Males and Female respectively; Under 5 Mortality rate is 91/1,000 live births; the Infant Mortality Rate 58/1,000 live births whereas the Maternal Mortality Rate is still at 578/100,000 live births; HIV/AIDS prevalence among Adults has fallen from 7.5% recorded in 2000 to 5.7% in 2007/08.

Towards Universal Coverage

Social protection is essential for attaining poverty reduction and sustainable economic development without which fair free market competition would not be assured to function efficiently. Improvement and extension of social protection thus contributes to the global agenda on stability and peace, which in turn, is a pre-requisite for sustainable development and attainment of Millennium development Goals (MDGs).

To speed up the implementation of the above strategies and initiatives to cover the needy groups, there are emerging developmental efforts towards joining efforts at the international organisations’ platforms and level. Recently there was a World Joint meeting involving the World Bank, WHO, ILO, GTZ and the Philippines Government convened in Manila, Philippines to seriously re-view and consider the issue of Extending Social Health Insurance to the Informal Economy, 18 - 20 October, 2006.

Successful universal coverage, particularly in developing countries needs more than just tools and initiatives, it needs devotion, commitments and firm and bold decisions of the following:

a) Government commitment to foster solidarity and equity in access to health care.
b) Government commitment to support the poor, disadvantaged and other vulnerable groups.
c) Periodic amendments of the regulations to deal with changes, contributions, benefits, providers and provider payment systems
d) Linkages to be established to create a strong and united network of social Insurance schemes both in the formal and informal sectors of the Economy.
e) Good governance and compliance to appropriate legislation and regulations.
f) Strengthening Social Health Insurance to cover the informal sector and criteria for determination of income for self employed should be set.
g) Affordability of contribution rate be set such that it can be affordable to cover the majority of the populations.

Health Sectors Reforms

Tanzania reformed its health services in 1990s by introducing cost sharing in the access to health services after a period of three decade of “free” services provision. Such programs included the user fees popularly known as the cash and carry. The Government also introduced the Drug Revolving Fund to subsidize medicine costs and later in 1996 the Community Health Insurance Fund (CHF) which was pretested in Igunga District and later on rolled over to other Districts to save the informal community in the rural and urban areas. In 2001 the Government introduced the National Health Insurance Fund for the formal sector employees, started with central Government employees in a phased coverage before being opened up for others.

In order to ensure that the Country succeed of the health reforms, the Ministry of Health and Social Welfare set up a Secretariat at the Ministry to coordinate all components of the Reforms which included Hospital reforms, decentralization, Health financing, Human Resources, Public-Private Partnership etc. Health matters in Tanzania are viewed into their wider perspectives, thus soliciting for partnerships, joint ventures, participation of various players and stakeholders including the Development Partners who have been playing a pivotal role in its development initiatives, strategies and resource support.

NHIF: Historical Perspectives and Setting of the Scheme

Before a Tanzania decided to introduce a Health Insurance Scheme, there was a need to have adequate preparations especially on the aspects of Members, Providers and Employers. Critical to this pre-implementation phase are the following activities:

Comprehensive study on the viability of the scheme: It was important to establish macro-economic parameters that were expected to be encountered in order to forecast the future changes in membership, costs of maintaining a basic benefits package and especially medical consumables and Medicines which are for most developing countries imported. Other key issues which had to be studied were: Willingness of people to pay for the medical services (affordability); the structure of health care facilities in the country; population characteristic; common diseases pattern; administrative capacity and trained manpower, including the Government’s resolve and commitment to “Health for all”.

A detailed Actuarial Study: For a Health Insurance Scheme to be successful it was to be structured around basic foundations as detailed in the Actuarial report. Unlike Pension Schemes, Health Insurance Schemes are very sensitive institution because they touch on the individual’s daily life, especially when she/he is desperate (sick). Usually the Actuarial report had to address the following issues:

a. The population to be covered to make the scheme viable.
b. Contribution rate that would determine the benefits package, envisaged reimbursements given the various utilization rates.
c. The benefits package and the different costing rates to be charged.
d. Establish the breakeven point below which the scheme could be sustainable.
e. The rate of administrative expenses had to be established and be kept flexible for accommodating expected future growth of operations (e.g. zonal offices) and scope of coverage.
f. Eligibility conditions to benefits and identification system to be used when accessing services.
g. Projection of Investments and Reserves. (Health Insurance in most African countries does not operate under a typical PAY-AS-YOU-GO system, but rather as a scaled Premium system).

Advocacy Programme: Once the scheme had been approved by the Government and an Act of Parliament passed and other legal requirements had been met, there was a need to prepare the Members, Employers and Health Providers psychologically. In Tanzania, for more than three decades the majority of people including the working population were used to “free” medical services. It was thought that adequate sensitization of the members of the scheme could do a lot to reduce the resistance and complaints that ensued. Unfortunately, adequate education and sensitization were not done as it was planned and expected.

The Health Care Providers had to understand the requirements of the scheme in order for them to be able to provide quality services to members. The success of any Health Insurance Scheme depended very much on how health care providers receives and treats its members. Again there was no concrete advocacy programme to health service providers.

Accreditation Process: Accreditation process is an important stage in the Management of a Health Insurance Scheme. In a vast country like Tanzania accreditation of health providers plays a key role in ensuring easy access by members to accredited health care providers.

The key aspects which were to be considered by the HIIT in the accreditation process were:

a. Technical aspects of accreditation:

b. Mapping of health facilities: Considerations had to be made on the location, distribution and accessibility of the facilities to members;

c. Public/Private mix of health providers: This aspect was important if our scheme had to bring competition among providers. However, the members had to be given a chance for free choice of where they wanted to go for treatment or for medical services. Tying people to one facility would limit mobility, portability of benefits and compromises the members’ choice of facilities and specialists;

d. Conditions for accreditation: The conditions for accreditation had to be stipulated clearly in the terms of agreement. For example providers were prohibited to discriminate members when providing health services under the scheme. Also providers were required to prescribe medicines using Generic names and the medicines had to be within the National Essential Medicine List (NEMLIT). Therefore a legal agreement was required to be entered between the scheme and the various providers. Prescribing Branded medicines has a high financial implication for developing economies like in Tanzania.

Reasons Behind Establishing NHIF

Some of the reasons behind the establishment of the NHIF included the following:

a. To have a National Scheme that covers groups in a phased manner;
b. To have a scheme that would provide local solutions to the problems existing in the health delivery system;
c. Strengthen the cost-sharing in public health facilities by providing opportunities for the formal sector employees to contribute for their own health through their contributions to the health insurance Fund;
d. To provide a free choice of provider facilities to Public Servants who were previously restricted to public health facilities;
e. To enhance health equity in the provision of health care services among formal sector employees
f. To institute a permanent and reliable system for the financing and provision of health services to formal sector employees;
g. To improve the accessibility and quality of health services by introducing competition among health care providers from the Public, Faith-based, Non Governmental Organization and Private Health Providers;
h. To reduce the financing budgetary gap in the health sector by complementing the Government budgetary allocation deficit to the health sector.

Description of the NHIF

The National Health Insurance Fund was established by Act of Parliament No. 8 of 1999. The Fund is administered by a Board of Directors which is autonomous but reports to the Minister responsible for Health matters.

The main objectives for the establishment of the Health Insurance Scheme are:-
a. To institute a permanent and reliable system for the provision of health services to formal sector employees and later on to other groups as the scheme gets experience;
b. To improve the accessibility and quality of health services by introducing competition among health care providers from the Government, and Private Health Providers;
c. To establish a reliable method which will enable formal sector employees to contribute towards their own health and those of their families;
d. To reduce the financing gap by supplementing the Government allocation to the health sector; and
e. To invest in economically viable projects in the health sector.

Membership and scope of coverage

The scheme is compulsory; it covers all public sector employees and currently the coverage has been extended to include other sectors as the Minister responsible for Health deems reasonable after being advised by the Board of Directors of the Fund. The membership includes principal or contributing members, spouses and four children and or legal dependants. Currently NHIF covers 7.1 % and the CHF covers 7.9% of the Total Population as per the 2002 population census, thus making total coverage of 15%.

Benefit package and exclusions

The benefit package is comprehensive covering consultations; Medicines (including all generic medicine in the NEMLIT cancer drugs, selective combination medicines & immune suppressants); Diagnostic tests (including CT Scans & MRI); OPD services; Inpatients services; All surgical services, physiotherapy; dental services, issuance of reading glasses and orthopedic appliance such as collar supports, walking aids, walking prostheses and hearing aids.

There are a few exclusions and limitations to the above benefits package such as services provided by public funded programs like TB and leprosy services and immunizations, major events of epidemics, public health programs and socially disapproved acts are among the exclusions.


The accreditation process is an important stage in the Management of a Health Insurance Scheme. Public, FBO’s and Private for profit facilities of all levels including Pharmacies & ADDO have been accredited. The total facilities that have been strategically accredited represents 80 % of the total market of health facilities. Accreditation has been under taken with a view of improving access to members, since the arrangement allows members have a free choice of where to access services throughout mainland Tanzania and Zanzibar.

Payment method “fee-for- service”

Fee for service is the payment mechanism that was adopted at the beginning of the operations of the Fund. Though this method requires a lot of administrative controls, the operational experience with the Fund showed that it’s the best payment mechanism for developing countries like Tanzania. The Fund is however still researching on what cost-efficient and effective provider payment mechanisms to be applied as the volume of business and the complexity of the benefits package increases.

Quality assurance

Apart from the core function of quality assurance, claims validation and facilities inspection, risk management has been the major undertakings which the Fund has been heavily involved since the inception of the scheme. In managing risks the Fund is using its Quality Assurance Department to ensure facilities provide quality services and are operating in accordance with the laid down standards and regulations and in accordance to the professional and standard treatment guidelines. In undertaking this important task the Fund has been insisting providers to comply with the following:

a. Standard Treatment Guidelines: These are Professional Guidelines researched, adopted, taught and enforced into practice.
b. Standard Facility Guidelines: issued by the Ministry of Health; to guide the facilities to abide by the ethical and professional standards and regulations
c. Adherence to the NHIF price list on medicines and medical supplies.
d. Adherence to Standard and Rational prescribing, including use of Generic formulations and names.
e. Use of the National Essential Medicine List (NEMLIT) and any other list provided by the Fund as guided by the developments and recommendations by the various medical professionals.


The Law guides the Investment functions of the Fund and governing policies in which it directs that investments be made in short term investment portfolios and venture avenues. The aim is to ensure that the Fund is cushioned against financial risks and is always liquid enough to be able to meet its short-term obligations.

Recent Development and Trends

Some of the recent developments in the management and administration of the scheme include the stewardship bestowed by the government to NHIF for the Administration of Community Health Fund (CHF) which was entrusted to the Fund since July, 2009. The decision by the Government was made with the aim of improving CHF operations; ensure that it covers the majority of Tanzanians and as a long term strategy towards health for all through joint NHIF/CHF linkages. Operating the two schemes under one roof has opened up more collaborations with Development partners such as the Swiss Tropical Public Health Institute (Swiss TPH), GIZ, KfW and other who have been working closely with the Fund to revamp, activate, review and improve the CHF scheme operations and attain the required outcomes in health and Millennium Development Goals attainment, as aimed at introduction of such reforms.

The scope of coverage of NHIF has being increased since 2009 to include the Police force; Councilors (who are not members of the Parliament); Religious Leaders & Students and self employed contributors. These categories were previously excluded from the scope of coverage due a phased approach that was adopted since the inception of the scheme.

With regards to NHIF contribution into the development of the health sector, the NHIF in collaboration with the University of Dodoma, under the Guarantee ship of the Government is undertaking construction of Modern Medical Care Centre in the capital Dodoma which upon completion will provide tertiary services and thus cut down on the need for referring patient abroad for treatment and act as a teaching facility.

Projects with Development Partners

There are a number of projects the Fund is undertaking in collaboration with Partners particularly in the improvements of CHF and few on NHIF operations as follows:

a. With SDC/Swiss Tropical Public Health Institute- on strengthening CHF in Dodoma Region (2011-2021) (started and showing good results);

b. Support poor pregnant mothers and their families in Tanga and Mbeya to access CHF services+ maternal health care With KfW- 2011-2014 (at designing stage); targeting 70,000 poor households;

c. Group enrollments: With GIZ/TGPSH- PPP on CHF and Health Promotion in Tanga and Lindi Regions- 2010-2012 (ongoing); So far 102 informal economic groups have been registered since Sept, 2010;

d. The Fund is at initial discussions with Ifakara Health Institute, WHO, Tanzania Social Action Fund (TASAF) on extension of CHF coverage.

Lessons learnt since Inceptions

Experiences gathered from NHIF of Tanzania evidenced that Political will is a central issue for the establishment and development of SHI in Africa however, Africa and developing Country should set SHI schemes that reflect their local needs but without total departure from the basics.

With regards to where members will be accessing health services, here comes the issue of Accreditation which is a tricky one, considering the weak infrastructure of most Public facilities in Africa. Thus, accreditation has a direct bearing to the success or failure of health insurance in Africa. NHIF managed to overcome by balancing on what was available, members concern and fairly sorted it out in relations to standard requirements issued by the Ministry of Health. It is important sometimes to give a blanket accreditation with timeline so that with re-imbursements from Health Insurance Fund they can improve their status and standards.

Intense and extensive members’ education campaign is an important undertaking. Dialogue with members and involvement of media is therefore a healthier approach for the scheme acceptability and transparency. NHIF management thought it was important to involve the media right from the starting of the operations. Knowledgeable and informed News Editors makes a lot of difference in as far as fair coverage of health insurance news coverage is concerned. Media in developing countries are working in a tight competitive market to attract the market especially the affluent society who can buy newspapers or have an access to internet, Radio and Television. Evidence from different parts of Africa revealed that negative health insurance news sells more and tends to influence Editors to feature in their papers but if properly informed they can make a fair coverage or provides a rightful opinion (Editorial Comments) with regards to the emerged situation.

SHI schemes should seriously be involved in the improvement and development of health systems delivery but this involvements should not be at the expense of sustainability of the scheme, hence sustainability of the scheme should not be comprised for political or popularity reasons.

The Way Forward

Some of the challenges NHIF is encountering include the non-availability and unpredictable changes in the prices (currently un-regulated); Health services to the rural areas especially the shortage of Medicines; shortages of Human Resources (Number, quality and specialty); Shortage & lack of equipments. However all these issues are being addressed through the Primary Health care development Program (MMAM program 2007-2017) and some signs of improvements have started though a lot of works is still needed. The NHIF management has also introduced a Medical equipment and facility improvements loan in order to speed up the improvements of health services delivery especially in the rural areas.

Other challenges are on the authenticity of claims submitted by few service providers who happen to collude with members or raise inflated bills. The Fund has established a Fraud department, develop early warning alarms; train its staff in fraud managements; improve inspections and review the claims systems as measures to curb frauds.

Extension of CHF coverage is still low as majority of Tanzanians are still accessing health services out of their pockets. The Fund has developed some strategies including strengthening of CHF operations at the Head Office and zones and making a national agenda as from the 2011/2012 financial year.

Successful operations of CHF require a sustainable approach especially on the matching funds if the current system and design of CHF is to be maintained. Following the recent awareness campaign and response from the community to join CHF especially in Councils where NHIF is working with Development Partners such as STPHI, SDC and GIZ that resources will be available to match increasingly community contributions. The NHIF management considers this as a genuine challenge that needs to be sorted out in collaborations with Development Partners and the Government itself.

*Emanuel Humba is the founding Director General of the National Health Insurance Fund. He was sorely responsible for setting up and establishing the National Health Insurance Scheme in 2001 and has been managing it up to now.


  • Humba E. (2005) Social Health Insurance: Implementing social security health care.: ISSA, Lusaka, Zambia
  • NHIF (2009) Actuarial and Statistical Bulletin, June 2009
  • URT (1999) National Health Insurance Fund Act No 8 of 1999.
  • URT (2001) Community health Fund Act, No 1 of 2001
  • URT (2004) Community health Fund General Regulations
  • URT (2009) Tanzanian Poverty and Human Development Report of 2009