SHA: A bleeding health insurance and government attempts to gain tenacity

The plunder is brazen, with little thought given to audit trails or to the impact of the money lost to the public; impunity seems to buttress the protagonists who have sought to brush it aside as noise from government critics.

Kenyans are calling out SHA for medical insurance payments made out to fictitious and non-functional health facilities, over time.

Brazen health officials

A case in point is Walalaha Nursing Home Limited, whose official government incorporation details indicate it got registered on February 19, 2025.  Two weeks ago, the Health Ministry suspended the same health facility over claims of issuing fake claims after the hospital was paid some Ksh. 2 million in June 2025.

The hospital is alleged to have been approved by the Ministry of Health on January 19, 2025, note, before its incorporation.

Several hospitals, notably Ladnan Hospital, formerly associated with the current SHA chairman, have been flagged for receiving unusually high payments, raising concerns over transparency and governance.

Since October 2024, Ladnan Hospital has reportedly received Ksh. 195 million despite being classified as a Level 3 outpatient facility.

Health Cabinet Secretary Aden Duale claims that flagged payments circulating on social media and mainstream media are matters already within their knowledge, as some were closed down three months ago, while others were suspended or downgraded in response to the scandal.

At his most recent press briefing, CS Duale said the Ministry of Health was in the process of a nationwide crackdown on fraud in Kenya’s healthcare sector and warned that hospitals, patients, doctors, and any other offenders would face the full force of the law if found culpable.

CS Duale said the anti-fraud campaign is a cornerstone of the Taifa Care programme, labelling it as an “uncompromising stance against fraud” and a constitutional obligation. The tough-talking Duale, however, admitted that falsified claims are draining billions from the Social Health Insurance Fund (SHIF) as out of Ksh.82.7 billion submitted in claims, Ksh.10.6 billion was rejected due to suspected fraud or non-compliance, as over Ksh.2.1 billion claims are under scrutiny.

SHA Chief Executive Officer, Mercy Mwangangi, would later suspend 45 health facilities and their pending payments withheld owing to the rampant fraud perpetuated on public health funds. This brings the number of suspended facilities to 85 after 40 were flagged earlier this month. 

In a special issue of the gazette notice on Tuesday, SHA Chief Executive Officer Mercy Mwangangi listed the health facilities ranging from different counties and their registration numbers. The health facilities are accused, among other things of inflating the bills due or falsifying the services offered to earn more.

A mystery to behold

At its conception, it was touted to be the panacea to the endemic and systemic corruption that was bedeviling the National Hospital Insurance Fund (NHIF).

In an interview with Citizen TV on Tuesday, former DP Rigathi Gachagua, said when the Kenya Kwanza administration came into office, the idea was to transform the NHIF into a more transparent and effective organization at a cost of about Ksh.800 million.

However, he claims that he was baffled when the storyline changed overnight in favor of SHA and killing off the NHIF. 

SHA remains a bizarre case of an attempted reinvention of an organization only to suffer the same pitfalls, if not worse, of the former entity.

Many Kenyans vividly remember when the Kenya Kwanza government first mooted the idea of scrapping off the National Hospital Insurance Fund (NHIF) and replacing it with SHA. The overarching argument was that the NHIF was corruption-ridden and was not redeemable as its fraud networks ran deep.

Despite all the hullabaloo the change occasioned, as well as the fact that it would affect a majority of the innocent workforce who were not assured of jobs after the changes, the government remained unbowed, SHA was to be.

Faith-based and private hospitals, owed millions of shillings over many months by the NHIF, were at a loss on how they would recoup their pending bills due from the moribund agency. To date, many of them still await pending payments from the defunct NHIF, apart from the new SHA.

Faults at the onset

During the process of rolling out SHA in 2024, the Auditor-General Nancy Gathungu noted in March 2025 that the government deployed a massive Ksh.104.8 billion into the SHA system, despite it neither owning nor controlling it.

According to the audit report, the system, its components, and intellectual property rights remain with the private consortium behind its development and only the infrastructure is set to be transferred to the government.

This arrangement means that SHA contributions and healthcare claims will finance a system the state does not own, a situation the Auditor-General warns poses a major risk to public funds and healthcare delivery.

Gathungu’s report says the project was also excluded from the procurement plan and the medium-term budgetary expenditure framework, which violated Section 53(7) of the Public Procurement and Asset Disposal Act of 2015.

Further, the Auditor General’s report indicates that the government breached the law by failing to use a competitive bidding process and instead procured the SHA system through a Specially Permitted Procurement contrary to Article 227(1) of the Kenya Constitution 2010, which requires a fair, equitable, transparent, competitive and cost-effective way of acquiring goods and services.

The Auditor General’s report indicates a tough contract situation for the government is nigh as the same managers of the digital system for SHA “prohibit the State from developing another system with the same functionalities to compete with the system in use, thereby endangering the Government’s functions in case of a system collapse or need for additional uses.”

The Auditor General also found that any and all disputes arising under the contract shall only be resolved outside Kenya according to clause 39.1 of the contract agreement. No corrective action from the government concerning these adverse audit queries has been forthcoming.

SHA contributions involve a mandatory monthly deduction of 2.75% of an employee's gross salary, with a minimum contribution of Ksh.300 and no maximum cap for salaried individuals.

Employers are responsible for deducting these funds from their employees' salaries and remitting them to SHA by the 9th of the following month. Non-salaried Kenyans are all expected to contribute the whole amount upfront of a minimum KES.3600, however, each household’s contribution is determined via a means testing instrument.

Alarm on SHA fraud

The looting spree at SHA has had many leaders weighing in on the same to condemn the plunder. The former Chief Justice, David Maraga, at a press conference yesterday, said that there are concerted efforts to cover up the loss of millions of shillings disbursed to fictitious health facilities by the SHA.

Retired Chief Justice Maraga said that the pulling down of the Kenya Master Health Facility Registry (KMHFR) portal was a direct attempt to cover up the criminal misdeeds orchestrated right at the Ministry of Health and called upon the Ethics and Anti-Corruption Commission (EACC) to kick in and investigate the scandal at the SHA.

Maraga’s concern was that fictitious facilities that CS Duale himself had said had been suspended in May this year continued to receive funds in subsequent months of June, July and August. He termed the aforementioned as brazen theft of public resources, yet the government remained mum about it. Ultimately, he called for the investigation of the CS for Health, Duale.

The Secretary General of the Central Organization of Trade Unions (COTU), Francis Atwoli, threatened to withdraw from the SHA board unless the agency is granted full autonomy. In a statement to newsrooms yesterday, COTU accused the Ministry of Health and the Digital Health Authority (DHA) of controlling SHA’s IT systems, thereby limiting its independence. Atwoli alleged that SHA’s lack of independence had crippled its ability to verify and process claims competently.

He said, “I am painfully unable to explain to workers what is happening at SHA, considering that SHA is being used as a conveyor belt to process payments while it does not control the IT system aimed at addressing the very problems created by the defunct NHIF.” He went on, “It is even more disturbing that even though SHA has its own independent Board which must be allowed to operate in line with its founding legislation, an amorphous entity, DHA, alongside the Ministry of Health, continues to make SHA secondary to them.”

However, the Cabinet Secretary for Health, Aden Duale, dismissed all these concern,s terming them “propaganda and blackmail” by “saboteurs” of the Social Health Authority (SHA) through social media and the mainstream media, as public anger becomes palpable over persistent scams in SHA.

Sustainability of SHA

In March 2025, the Office of the Auditor-General reported grave concerns regarding the sustainability and success of SHA. In the report, they highlighted a number of issues, notably SHA’s "chaotic roll out, corruption and loss of funds."

It called for a parliamentary investigation into the procurement, financial sustainability, and governance of SHA.

In its adverse report, the Office of the Auditor-General (OAG) pointed to a poorly managed implementation of SHA, raising significant concerns about its governance structure and overall operational efficiency.

The OAG report went further to record serious issues of corruption and a potential loss of public funds within the SHA system, suggesting that the public is not adequately protected.  To mitigate these concerns, the OAG made a call to the National Assembly Health Committee to immediately investigate SHA's operations and for both the National and Senate to review the Social Health Insurance Act, 2023, to address its shortcomings.

Call for MoH changes

A parliament coalescing under the umbrella of “Kenya Moja” political movement has demanded for the immediate resignation of Health Cabinet Secretary Aden Duale and the Social Health Authority (SHA) Chief Executive Officer, Mercy Mwangangi.

They blamed them for overseeing what they called “a well-calculated scandal.” The legislators claimed that SHA was being misused to siphon out funds to phoney medical facilities, some of which are said to be non-operational, such as Sipili Maternity and Nursing Home, which was shut down following a TV exposé, but which has recently received five million shillings from SHA.

Caleb Amisi, the Saboti MP, has summarized the public mood by stating that the crisis at SHA is nothing short of a national security matter, demanding that the concerned authorities address it conclusively and fast. Kenyans were already wary of SHA; however, the scandal that has hit the public medical insurer is taking away the little trust it has been regarded with.

SHA’s failure seems premeditated, systemic and widespread, meaning it will shortly affect services to many Kenyans and negatively impact the nation’s dream for universal healthcare. SHA funds have been looted into millions, maybe billions. 

Its system is in the hands of other entities who take a piece of the pie before those offering the medical services, and by many counts, it seems like it was made to stutter, cough and stall, very much like its predecessor, as a weary and bewildered public has nowhere to turn to.