Addis Abeba Raises Health Insurance Fees as Fiscal Pressures Mount

Oct 18 , 2025. By NAHOM AYELE ( FORTUNE STAFF WRITER )

Addis Abeba’s health officials have announced a major shift in how residents pay for health insurance. Instead of the longstanding flat annual fee of 1,500 Br a household, new rates will be linked to household income. Most families will see their contributions rise to 2,000 Br, while the highest-income residents could pay up to 10,500 Br under the new scheme.

In a sweeping reform that upends nearly a decade of uniform health insurance contributions, Addis Abeba’s health authorities have introduced an income-based premium system, ending the flat 1,500 Br annual household rate.

The policy shift, now in effect, signals a major recalibration of how the capital’s growing population will pay for public healthcare, raising both hopes for sustainability and fears of exclusion. The bulk of households will now pay 2,000 Br, marking a 33pc increase, while high earners face up to 10,500 Br. Officials argue that this overhaul was long overdue to salvage the community-based health insurance (CBHI) scheme, which is straining under rising healthcare costs and underwhelming contributions.

But critics warn the policy risks burdening low-income households who rely most heavily on the system, and already struggle to access medicines and timely care.

“The study recommended higher rates than what we introduced,” said Yohannes Chala (MD), head of the Addis Abeba Health Bureau. “We moderated the increase to avoid excessive pressure.”

The change comes as the city struggles with soaring healthcare costs and mounting pressure to make the community-based health insurance scheme sustainable. Last year, more than 2.5 million people joined the city’s insurance program, and around 2.83 million residents and their families used outpatient and inpatient services at public health centres. Officials say the Bureau wants to renew all existing memberships and expand enrollment by over 10pc, targeting more than 2.75 million residents this year.

Yohannes disclosed that the new structure links contributions to earnings, with middle-income families expected to pay 6,900 Br. For the poorest, the city Administration will subsidise 1,500 Br of the fee. New members will pay a 200 Br registration fee, and children over 18 or additional family members in a household will be charged half the basic amount.

The shift comes as health officials try to expand the program’s reach and financial footing. According to Ebrahim Teka, director of community-based health insurance at the Bureau, Addis Abeba has begun requiring business owners to join the scheme. It is working to ensure that contributions are set according to each household’s income.

“Residents have been categorised based on earnings and assets, defining who pays more or less, or qualifies for government subsidies,” Ebrahim told Fortune.

When individuals register, their payments are set according to these classifications.

Bureau estimates show that 10pc of contributors will pay the top rate, another 10pc the middle tier, and five percent, the poorest, will receive government subsidies. The vast majority, however, will pay 2,000 Br. According to Ebrahim, households are sorted into income groups based on factors such as home and vehicle ownership as well as employment status.

The city’s health officials say they are walking a tightrope, trying to keep health insurance affordable while making it sustainable. But for many, the burden is rising even as the promise of care remains elusive.

For many low- and fixed-income residents, such as Emawayish Mengesha, 65, a mother of six, the changes are already proving burdensome. She lives with chronic hypertension and gets regular treatment for cataracts at Alert Hospital. Her husband, a retired employee of the Ethiopian Electric Power, also deals with hypertension and diabetes. Their main income is his pension, which barely covers their daily needs.

Emawayish registered for the insurance scheme two years ago, paying less than 1,000 Br. It protected her family from crushing medical bills but a stubborn problem, shortages of medicine at public pharmacies, persisted.

“We pay from our pension for health insurance," she told Fortune. "Yet, often we can’t get the medicines we need.”

Emawayish's frustration deepened after hearing the new rate could double.

“I expected the government to consider my situation," she said. "I’m asked to pay more. How will I manage that?”

Gizewerk Alemu, a mother of four, shares similar worries. Her husband, who once worked in clothing retail, is now housebound with a heart condition, while she is battling a liver infection. She considers health insurance to be important, but even the lowest new rate puts strain on her family’s finances. She complained about long lines and the lack of medicine at public health centres, which often forces families to pay out of pocket.

“Everything is going up, and the pressure on my children keeps growing,” she said.

Yohannes defended the decision to raise rates, arguing that it was based on careful research.

Last year, total contributions reached 480 million Br, while the city Administration subsidised the scheme with 1.3 billion Br, members covering only a small share of the program’s costs. Even after the latest increase, contributions remain insufficient to keep the system running without continued government support.

“The adjustments were designed to stay affordable despite inflation and rising healthcare costs,” he said.

Officials acknowledge the city faces challenges in delivering reliable service. According to Yohannes, the shortage of medicines affects both insured and uninsured patients. His Bureau has started modernising the medical supply system and is tightening oversight to reduce misuse and delivery delays.

“For those unable to pay, the government will continue to cover the full amount,” he said.

Ebrahim too stood by the changes, calling the new rates both fair and necessary. The scheme covers nearly all medical expenses except cosmetic procedures, and he saw some members receiving care costing hundreds of thousands of Birr while paying only a small share.

“Compared to the benefits members receive, the recent adjustment is marginal,” Ebrahim said. "Residents should register before the November 10 deadline."

Experts argue that the shift to an income-based model is overdue, though not without risks.

According to Ebsa Mohammed, an insurance consultant and manager at Alpha Certification Consultancy, the Bureau had long been advised to adopt a fairer, income-based approach.

“We’ve been saying this for years, it makes the system fairer,” he said. “They didn’t act on it earlier, but it’s good they’re finally moving in that direction.”

He welcomed the change but warned of two risks of unfair classification and affordability.

“If assessments are done poorly, residents could be mislabelled as well off,” Ebsa said. “Someone living in a villa as a caretaker could end up charged 10,500 Br they can’t pay.”

Ebsa also warned that the minimum could discourage low-income families from joining. He urged the city officials to balance fairness with affordability and to improve service delivery.

“If citizens experience better care and shorter waiting times, more people will join willingly,” he said. “When people see the benefits, participation will grow naturally.”

Earlier this year, the city made it mandatory for businesses to contribute to the health insurance scheme before they could access government services such as trade license renewals and tax clearances. Officials insist the measure is not a new tax but an expansion of the existing healthcare framework to improve access to affordable medical care.

The regulation, based on a 2017 directive, places businesses into three categories: Class A at 10,500 Br, Class B at 6,900 Br, and Class C at 2,000 Br. The Bureau has collected 100 million Br in contributions from businesses so far.

PUBLISHED ON Oct 18,2025 [ VOL 26 , NO 1329]