Discovery moves to shore up share price

By kabelo.khumalo Time of article published Aug 19, 2019

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Discovery on Friday moved to arrest the sharp decline in its share price since the release of the National Health Insurance (NHI) Bill.

Discovery said in a statement it was seeking clarity on the potential impact of NHI on the future role of private healthcare and medical schemes.

“We intend to make submissions on a wide range of issues raised by the NHI Bill in the hope of making a constructive contribution to improving the NHI Bill before it is finally promulgated into law,” Discovery said.

“A key focus area for us is the future role of medical schemes. Importantly, we do not envisage any material impact on the medical scheme administration business of Discovery Health for the foreseeable future.”

The group’s share closed Friday’s trading session up 4.1 percent at R110.66 after days of bleeding.

Discovery’s counter has fallen 30.12 percent so far this year.

The NHI is designed to pool funds to provide access to quality, affordable healthcare services for all South Africans based on their health needs, irrespective of their socio-economic status.

Data from Statistics South Africa released in May showed that more than 47 million South Africans did not have medical scheme cover, while 9.4 million people have the benefit.

Discovery said it believed the NHI and private healthcare could co-exist.

“We also think that, once fully emerged, the NHI will create additional opportunities for medical schemes to innovate in their products, and for the development of new health insurance products outside of the medical scheme environment.”

The first phase of the NHI is from 2017 to 2022. It is envisaged that the second phase - from 2022 to 2026 - will see the scheme become fully established and operational.

Mediclinic said in a statement there was some ambiguity regarding the scope of contracting for private service providers with the NHI fund and, consequently, with medical schemes.

“Clarity regarding the role of medical schemes will therefore depend on the package of healthcare service benefits reimbursed by the fund, and the practical application of referral pathways,” Mediclinic said.

“Mediclinic believes that, subsequent to an NHI contribution, individuals should retain their existing choice to purchase private medical scheme membership and selection of healthcare service provider.”

The scheme is also set to have a major impact on the country’s constrained fiscus. The National Treasury had estimated that the NHI will cost R256 billion, but has said the department plans to release a revised paper with a revised costing.

The bill states that the NHI will be funded through payroll taxes for employees and employers, a surcharge on personal income tax, the reallocation of medical scheme tax credits to the fund and general taxes.


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