Shares in Discovery and other South African medical insurers slumped after President Cyril Ramaphosa said he\u2019d sign into law a new health bill that\u2019s opposed by businesses.<\/p>\n\n\n\n
Ramaphosa will assent to the legislation on Wednesday, two weeks before national elections in which the ruling African National Congress (ANC) risks losing its majority for the first time since coming to power three decades ago. <\/p>\n\n\n\n
The president has vowed on the campaign trail to use the legislation to end \u201chealth-care apartheid.\u201d<\/p>\n\n\n\n
Discovery dropped as much as 7.4%, the most since March, <\/strong>while peers, including Momentum Metropolitan, Sanlam and Old Mutual, also traded lower. <\/p>\n\n\n\n Discovery has dropped 22% this year, compared with a 2.7% increase in the FTSE\/JSE Africa All Share Index.<\/p>\n\n\n\n The National Health Insurance Bill provides a framework for providing universal care through a state-run fund and bans the private sector from financing treatment covered under the plan.<\/p>\n\n\n\n Ultimately, the legislation aims to provide quality health care for the 85% of South Africans who have no medical cover and rely on a decrepit public system with too few doctors.<\/p>\n\n\n\n Discovery derives about 34% of earnings from its South African health business, according to data tracked by Bloomberg. <\/p>\n\n\n\n Avior Capital Markets analyst Adrienne Damant said in an email response to questions that under the NHI Bill, that division will no longer be allowed to operate.<\/p>\n\n\n\n \u201cUltimately, it\u2019s an essential part of Discovery\u2019s business that regulation is outlawing,\u201d she said.<\/p>\n\n\n\n South Africa\u2019s FTSE\/JSE Health Care Providers Index was among the biggest decliners on the Johannesburg stock exchange Tuesday, with hospital operator Netcare leading a retreat in the sector, falling 5.7%, the most since April 2023. <\/p>\n\n\n\n Shares in Life Healthcare dropped 2%.<\/p>\n\n\n\n While there\u2019s widespread support for reform of a system in which a multibillion-rand private healthcare industry services less than a fifth of the population, NHI critics argue the government\u2019s proposals haven\u2019t been properly costed and may be successfully challenged in court.<\/p>\n\n\n\n \u201cThe implementation of the NHI bill in its current format is not sustainable, and we expect the already documented challenges made by numerous stakeholders to become more vocal, particularly around the constitutionality of the bill,\u201d Damian McHugh, chief marketing officer at insurer Momentum, said in an emailed statement.<\/p>\n\n\n\n South Africa\u2019s main opposition, the Democratic Alliance (DA), said it plans to challenge the law in court once it\u2019s signed into law.<\/p>\n\n\n\n \u201cWe have built up reams of correspondence, including with Ramaphosa himself, that we will enter into evidence to show that the process which led to the adoption of this bill by Parliament disregarded public input and that the bill itself is flagrantly unconstitutional,\u201d DA leader John Steenhuisen said in a statement on Tuesday.<\/p>\n\n\n\n
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