Health Cabinet Secretary Aden Duale has addressed the controversy surrounding the 2% deduction applied to every claim under the Social Health Insurance (SHA) scheme. The government confirms that the deducted funds are directed to the Digital Health Agency (DHA) to support the national health information system.

Legal Framework and Purpose of the Deduction

In a statement dated August 4, 2026, CS Duale explained that the Digital Health Agency, established under Section 5 of the Digital Health Act 2023, is the designated recipient of the fee. The deduction is authorized by Regulation 11(2) of the Digital Health Data Exchange Component Regulations 2025, published in the Kenya Gazette on April 11, 2025.

The fee is capped at a maximum of KSh 5,000 per transaction, regardless of claim size, as stipulated in the Third Schedule of the regulations. Duale emphasized that the charge is not discretionary but a capped service fee for using the digital claims processing system.

Concerns Raised by Hospital Owners

Despite this, hospital owners have raised questions about the deduction’s implementation, particularly whether the KSh 5,000 cap is enforced. Some note that a 2% deduction on large claims often exceeds this cap, leading to confusion over which rule applies in practice.

Additionally, hospitals have criticized the lack of upfront disclosure of the deduction during SHA onboarding and have sought detailed records of individual deductions to verify compliance.

Transparency and Accountability

CS Duale assured that all deducted funds are public monies subject to audit under the Public Finance Management Act and the Public Audit Act. He clarified that while the private company Finsprint is involved as a subcontractor within the Safaricom Consortium contract, it does not receive or control public funds or hospital payments.

He further noted that the regulations underwent public participation, stakeholder consultation, and parliamentary approval before implementation.

Pending Legal Proceedings

The matter is currently before the High Court, with CS Duale named as a respondent. The court will determine the legality and disclosure practices of the 2% deduction, as well as whether the fee applies retrospectively to facilities contracted before the regulations were gazetted.

CS Duale stated, “The government will file its full response on the record, and I will abide by the determination of the court. I will not litigate this matter in the press.”

Ongoing Debate

Hospital representatives, including Dr. Brian Lishenga, former chairperson of the Rural Urban Private Hospitals Association, maintain that while the fee itself may be lawful, hospitals were not adequately informed at the outset. They continue to demand transparency and detailed transaction records.