NHI prompts decline in private healthcare share price

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The share price of private medical healthcare providers and pharmaceuticals has dropped significantly since the release of the National Health Insurance Bill (NHI) last week.

Aspen Pharmacare’s share price has fallen by 30% and Discovery Health has shaved off over 13% in stock price this week.

Analysts say part of the cause in market jitters is the potential that the NHI will cap the price on medical products at over 20% lower than they currently are; which will affect profit margins of Aspen and others.

Portfolio Manager at Vestact Michael Treherne says, “To fund the NHI, it means taxes are going to have to increase; which means that disposable income for consumers will decrease. So, how many consumers will have enough left over to contribute further to a medical aid scheme?”

Treherne adds that because the NHI will need to be run by certain entities, there’s a good chance that Discovery, which accounts for a third of all medical aid members around the country, will charge these entities a fee to pay hospitals and healthcare professionals.

In a statement, Discovery Health said it is still studying the terms of the future role of medical aid schemes as it is currently not clear in the Bill.

It added that once South Africans have contributed to the NHI fund, they should have the freedom to purchase healthcare service cover through medical schemes, including the NHI, should they choose to do so.

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