The Insurance Regulatory Authority of Uganda (IRA) is proposing a new formula for calculating contributions to the National Health Insurance Scheme (NHIS), replacing the contentious flat percentage deductions with an income-band system similar to Uganda Revenue Authority’s Pay As You Earn (PAYE) tax model. The proposal is aimed at addressing concerns that led President Yoweri Museveni to decline assent to the National Health Insurance Scheme Bill in 2021 and could pave the way for the legislation to be re-tabled before Parliament.
Dr Protazio Sande, the Acting Chief Executive Officer of IRA, said the regulator is already engaging the government on possible amendments to the Bill before it returns to Parliament. According to Sande, the proposed model would group employees into income bands, with contributions determined by earnings rather than a uniform percentage applied across all workers.
He argues that the approach would be fairer and more acceptable to employers and employees who previously opposed the proposed contribution structure. “Rolling out the National Health Insurance Scheme is long overdue because there is an urgent need to relieve Ugandans of the burden of medical bills every time they fall sick. When resources are collected in the same pool, it also informs the government of how much additional budget allocation is required to ensure equitable quality healthcare services,” Sande said.
The National Health Insurance Scheme Bill was passed by Parliament in March 2021 to expand access to affordable healthcare by pooling contributions from workers, employers, and the government. Under the original proposal, employers were required to contribute four percent of an employee’s salary, matching the employee’s own four percent contribution, while people in the informal sector would contribute one hundred thousand shillings annually.
However, President Museveni returned the Bill to Parliament after employers and private sector organisations objected to the financial obligations contained in the legislation, arguing that they would increase the cost of doing business. The government announced in 2023 that it intended to re-table the Bill after addressing concerns raised by stakeholders, but it has yet to return to Parliament.
Sande said IRA’s technical teams are preparing to present the income-band proposal to the government and other stakeholders for discussion before the Bill is reconsidered. The proposal is similar to Uganda Revenue Authority’s progressive PAYE system, under which tax rates increase according to income levels, rather than applying a uniform deduction to all workers.
Health sector stakeholders have consistently urged the government to fast-track the National Health Insurance Scheme, arguing that it remains the missing link in improving access to affordable healthcare. Reverend Father Emmanuel Katabaazi, the Masaka Diocesan Health Coordinator, said implementation of the scheme would particularly benefit older people and vulnerable households struggling to meet healthcare costs.
“If implemented, the scheme will save thousands of elderly people who are currently unable to afford treatment,” he said. Although the proposal has not yet been adopted by the government, it represents the first publicly disclosed attempt to redesign the contribution model that stalled one of Uganda’s most significant health financing reforms-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
