Uganda’s economic landscape is changing, and businesses must prepare for the financial implications. The shilling is under pressure, inflation is rising, and global supply chain disruptions are pushing up the cost of essential imports.
These developments present a challenge, specifically to employers who are preparing their 2027 budgets: the rising cost of employee healthcare must be at the heart of the budget cycle.
The warning is already on the wall. The Uganda Bureau of Statistics, annual headline inflation increased from 4.1 per cent in August to 4.6 per cent in September 2026. Energy, fuel and utilities inflation reached 14.5 per cent, while petrol and diesel prices rose by 30.9 per cent and 42.5 per cent respectively.
The Bank of Uganda has responded to mounting economic pressure by raising the Central Bank Rate from 9.75 per cent to 12 per cent, citing currency depreciation and growing inflation risks. The central bank now projects headline inflation of between 7 and 7.5 per cent over the next 12 months.
Meanwhile, the Shilling briefly touched the Shs4,500 mark against the US Dollar in market trading on October 23.
The consequences of these developments, especially for healthcare financing and medical insurance, cannot be overstated.
Why healthcare costs will continue rising
Uganda depends heavily on imported medicines, medical equipment and other healthcare supplies. Industry estimates suggest that approximately 90 per cent of medicines are imported. When the shilling weakens against the dollar, hospitals and healthcare providers must spend more to purchase these essential supplies.
The ongoing conflict in the Middle East has added pressure through higher fuel costs and disruptions to international supply chains. Hospitals cannot absorb these additional expenses indefinitely. Eventually, they must adjust the prices of consultations, medicines, diagnostic procedures and treatment.
For insurance companies, this means paying more for the same services, even when the number of patients remains unchanged. Yet medical insurance premiums are generally agreed upon at the beginning of the policy year. Insurers must, therefore, manage rising treatment costs against premiums calculated under different economic conditions. This creates a growing sustainability challenge.
Aside from inflation, we are witnessing an increase in healthcare utilisation. Greater health awareness has encouraged more people to seek medical attention. At the same time, lifestyle-related illnesses, chronic conditions and mental health concerns are placing additional demands on medical schemes. This requires employers and insurers to rethink how they manage employee healthcare.
Additionally, we are confronted with another disturbing trend of health insurance abuse by employees. We have encountered cases where an individual visits hospitals as many as 52 times in one year.
While some patients genuinely require frequent medical attention, such patterns also demand closer examination to establish whether care is appropriate or whether benefits are being misused.
There are also cases of employees sharing medical insurance cards with unauthorised family members. Such practices increase claims and transfer additional costs to employers. When claims consistently exceed the premiums collected, insurers may have to increase renewal premiums substantially.
The solution is not to discourage employees from seeking treatment, but to promote responsible healthcare utilisation, prevent fraud and intervene early when employees develop medical conditions.
Budgeting for 2027
Employers must budget realistically for 2027.
As companies prepare their budgets for the coming year, my message is: medical insurance premiums are likely to rise, and employers must plan accordingly. Based on current claims experience and healthcare costs, employers should consider budgeting at least Shs1.2 million annually per employee for medical insurance.
This is a planning benchmark rather than a universal quotation. Actual premiums will depend on the benefits selected, workforce characteristics, claims history and healthcare providers included in each scheme. Companies budgeting significantly below this level risk purchasing cover that cannot adequately meet their employees’ healthcare needs.
For years, competition among insurers has encouraged aggressive price reductions. A scheme that should cost Shs1.2 million may be offered elsewhere for Shs1.1 million or even Shs800,000. While such discounts may appear attractive, they can undermine the sustainability of medical insurance.
Employers often select the cheapest quotation without examining the quality of healthcare their employees will receive. But a low premium becomes expensive when employees cannot access appropriate hospitals, experience delays in treatment or face unexpected medical expenses.
Employers must move the conversation from price alone towards value. Employee wellbeing is an investment, not an expense. Businesses routinely allocate substantial resources to buildings, equipment, vehicles and technology. Yet employees remain their most valuable assets.
An organisation that neglects employee health may spend more through absenteeism, reduced productivity and the management of preventable illnesses. Employers should use available medical claims data to assess the health challenges affecting their workforce.
Our automation investments have also reduced claims turnaround times from more than three months to less than one month.
Sustainable healthcare financing requires shared responsibility among insurers, employers, healthcare providers and employees. The economic pressures facing Uganda are unlikely to disappear overnight. Medical costs will continue responding to currency movements, inflation and growing healthcare demand.
Employers must recognise these realities before finalising their 2027 budgets. The question should no longer be how little a company can spend on medical insurance, but how it can protect its workforce.
Investing adequately in employee healthcare today is one of the most important decisions a business can make for its productivity, resilience and long-term success.