KAMPALA. The Insurance Regulatory Authority of Uganda has proposed a new income-based formula for contributions to the National Health Insurance Scheme.
The proposal seeks to replace the earlier flat percentage deductions with an income-band system similar to Uganda Revenue Authority’s Pay As You Earn tax model.
Dr Protazio Sande, the Acting Chief Executive Officer of IRA, said the regulator is engaging the government on possible amendments to the National Health Insurance Scheme Bill before it is returned to Parliament.
The proposal could help address concerns that led President Yoweri Museveni to decline assent to the Bill in 2021.
IRA Wants Contributions Based on Income
Under the proposed model, employees would be grouped into income bands.
Their contributions would then depend on earnings instead of a uniform percentage applied to all workers.
Dr Sande said the model would be fairer and more acceptable to employers and employees who previously objected to the original 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.
Original Bill Faced Employer Opposition
Parliament passed the National Health Insurance Scheme Bill in March 2021.
The Bill aimed 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.
Employees were also required to contribute four percent of their salary.
People working in the informal sector were expected to contribute Shs100,000 annually.
However, President Museveni returned the Bill to Parliament after employers and private sector organisations raised objections.
They argued that the proposed contributions would increase the cost of doing business.
Bill Yet to Return to Parliament
The government announced in 2023 that it planned to re-table the Bill after addressing stakeholder concerns.
However, the legislation has not yet returned to Parliament.
Dr Sande said IRA technical teams are preparing to present the income-band proposal to the government and other stakeholders for discussion.
The model resembles Uganda Revenue Authority’s progressive PAYE system, where tax rates increase according to income level.
Supporters of the proposal say this would avoid applying the same deduction rate to all workers, regardless of earnings.
Health Stakeholders Urge Faster Action
Health sector stakeholders have continued to urge the government to fast-track the National Health Insurance Scheme.
They argue that it remains a missing link in efforts to improve access to affordable healthcare.
Reverend Father Emmanuel Katabaazi, the Masaka Diocesan Health Coordinator, said the scheme would support older people and vulnerable households struggling with medical costs.
“If implemented, the scheme will save thousands of elderly people who are currently unable to afford treatment,” he said.
Although the income-band proposal has not yet been adopted by the government, it marks a fresh attempt to redesign the contribution model that stalled one of Uganda’s major health-financing reforms.
