This market reaction on the Tuesday – the day prior to the ratification - underscores the opposition from the business sector towards Ramaphosa's decision. Discovery, in particular, witnessed its most significant drop since March, plummeting by 7.4%. Contrastingly, while the broader FTSE/JSE Africa All Share Index saw a modest increase of 2.7% this year, Discovery's shares have tumbled by over 18%.
The impact was not uniform across the sector, as evidenced by the performance of other medical insurance providers. Momentum and Sanlam, for instance, have maintained year-to-date gains of 2.2% and 1.58%, respectively, indicating a lesser impact compared to Discovery.
Furthermore, the market downturn extended beyond insurers, affecting hospital operator Netcare, which experienced a notable decline of 5.7%, marking its most significant drop since April 2023.
Additionally, while Life Healthcare's shares dipped by 2% upon the bill's signing, the company has suffered a substantial year-to-date loss of over 40%.
The market reaction stems from South Africans anxiety about the implications of the new law on medical aids, worrying about potential benefit changes and the need for cancellations, says Adrian Gore, chief executive officer of Discovery.
In particular, Section 33 of the new Act, is deemed problematic, and suggests that once NHI is fully implemented, medical schemes may only cover services not included in NHI, possibly leading to their replacement.
“Only once the NHI is ‘fully implemented’ will medical schemes be limited in the cover they provide to medical scheme members. Until this point, there will be no change to your medical scheme cover. We believe it will take a long time – a decade at least – to achieve ‘full implementation’ given the scale and complexity of reforms needed,” Gore said.
Gore's statement seems to have assuaged market concerns, as evidenced by the recent uptick in Discovery shares since last Tuesday, May 14, 2024. Monday's price range of ZAC 11,500.00 - ZAC 11,759.00 (May 20, 2024) marks a substantial rise from the ZAC 10,748.00 price observed at the close of trading last Tuesday.
The NHI Bill's signing concludes five years of heated debates and public hearings since its introduction in 2019. This law strives for universal healthcare coverage, with a focus on aiding millions of underprivileged South Africans, the elderly, and veterans.
