The cabinet recently approved a National Social Health Insurance Scheme that will pool workers’ resources to provide better health care.
Under the proposed scheme employees will remit four percent of their gross salary to the scheme while employers will throw in an extra four percent on the employees’ behalf.
This action is informed by two desires. One to provide better health care across the board for all employees and two and most importantly to create a long term pool of savings that can be mobilized for development.
Uganda will be following in the footsteps of many western economies and South East Asian tigers in trying to implement this policy.
Ugandans in general save less than many of their cousins in sub-Saharan Africa. A high savings rate is crucial for sustainable development because the long term funds that savings imply can be used to develop infrastructure – roads, rail and power generation, and support the development of industry and business through cheaper finance.
One can read into the government’s action the analysis that to alleviate poverty and many of its causative agents – poor infrastructure, illiteracy and disease we need more and more money. That is the thinking that has driven our development agenda for the last 20 years. However the current initiative is a step up from our recent history as we are now looking to our own resources to fund our development.
But the premise that poverty can be eradicated by throwing money at it therein may be the seeds of the new schemes destruction.
Poverty will be eradicated when government creates the capacity to manage public resources better for the benefit of its population. And with this improved capacity will come more resources – money follows good management all the time.
Precedents abound and that is the reason for initial criticism of the scheme.
Businesses are not amused by the new initiative seeing it as a new tax that will make them uncompetitive regionally and cripple their business.
Other countries exert a higher ratio of personal income as taxes but the difference is that at least they deliver public goods to the satisfaction of their citizens.
As most employers are already providing some health benefits through existing health vendors government should either move to strengthen this model or phase in their proposed change after they have improved the health infrastructure that will benefit the workers.
The main would-be stakeholders of the program have not been consulted lending credence to suspicions that he policy has not been well thought out.
There is little or no indication on how the scheme will work, will be sustained and grow overtime.
