Addis Ababa Reduces Grade 'B' Taxpayers' Health Insurance Premium to 2,000 Birr

The Addis Ababa Health Bureau has announced that health insurance contributions for Grade 'B' taxpayers will be drastically reduced to 2,000 Birr, down from the previous rate of 6,900 Birr. According to The Reporter, this significant adjustment follows the implementation of the revised Income Tax Proclamation No. 1395/2017, which integrates the former Grade 'C' tax category directly into Grade 'B'. Under Community-Based Health Insurance (CBHI) Proclamation No. 1273/2014, beneficiaries formerly classified as Grade 'C' taxpayers were contributing 2,000 Birr annually for health insurance.

Dr. Yohannes Chala, head of the Addis Ababa Health Bureau, explained that the CBHI Proclamation mandates that beneficiaries make contributions aligned with their income levels. A tier-based payment system has been actively implemented since last year to realize this mandate. Previously, the system was structured across four distinct categories: Grade A, Grade B, Grade C, and low-income community members. However, the revised Income Tax Proclamation No. 1395/2017 consolidated these groups into three by eliminating Grade 'C'.

Consequently, taxpayers who previously fell under Grade 'C' will be integrated into Grade 'B' for the upcoming 2019 fiscal year. To avoid subjecting these individuals to a steep rate hike, they will continue to pay their original 2,000 Birr contribution. Dr. Yohannes confirmed to The Reporter that existing Grade 'B' taxpayers who were previously paying 6,900 Birr will also benefit from this adjustment, seeing their contributions drop to the same 2,000 Birr threshold. While the exact number of original Grade 'B' taxpayers enrolled in the health insurance system was not specified, the bureau chief noted they represent a limited group. He added that the government will provide budget subsidies to offset the resulting financial pressures and balance the system.

The bureau head emphasized that the majority of health insurance beneficiaries in the city were registered under Grade 'C'. Forcing them to pay the standard Grade 'B' rate would have effectively tripled their contribution costs, an outcome the administration deemed unfair. In response, the Addis Ababa City Administration Cabinet, during its 6th-year, 1st regular meeting held on Friday, Nehasse 15, 2018 E.C., approved a proposal to revise the CBHI contribution structure to enforce this lower rate.

Clarifying the scope of the decision, Dr. Yohannes told The Reporter that the cabinet's move is strictly a structural realignment designed to accommodate former Grade 'C' taxpayers under the Grade 'B' payment framework, rather than an introduction of new fee hikes. Although the original CBHI proclamation mandated that taxpayers contribute to the health insurance fund, it had long omitted specific payment rates. Following extensive study, defined rates were finally implemented starting in the 2025/26 fiscal year.

Under the existing payment structure, a Grade 'A' taxpayer in the city administration pays 10,500 Birr annually to secure health coverage for themselves and their entire family. For residents with absolutely no capacity to pay, the government provides full subsidies. Bureau data reveals that in the 2024/25 fiscal year, 2.5 million Addis Ababa residents were enrolled in the health insurance system, with 1.3 million actively receiving services. In the 2018 fiscal year, coverage expanded to 2.7 million residents, supported by city administration subsidies exceeding 1.3 billion Birr. The bureau plans a 10 percent expansion of these services for the 2026/27 fiscal year.

The community-based health insurance program, widely regarded as a vital social safety net for low-income populations, was launched in Addis Ababa in 2010 E.C. It initially piloted in ten districts, benefiting fewer than 70,000 residents. Today, the program has scaled up to cover every single district across the capital, according to the health bureau's records.