Health Insurance - how will it react now?

In a recent development in the health insurance sector, the public and private health insurance companies striked off the cashless facility from the most of the hospitals in the metros. This created such a splash that the lesser important news of taxing the cashless facility (a service tax of 10.3% levied on availing cashless facility) went practically unnoticed. The insurance companies had been negotiating with the hospitals for the last 6 months to reach an agreement on pricing of procedures. Lack of positive response from the hospitals left the insurance companies with no choice but to remove the cashless facility.

The point to wonder here is that the correction did happen and the claim ratios will come down a notch. But the cost of this correction is a penalty that the consumers should pay - in terms of shelling out the total sum and claim from insurance (without assurance that all of it will be reimbursed) or pay 10.3% tax in the hospitals were the facility is still available. That is huge, considering the poor infrastructure and the lack of health education in the country. This could have been easily avoided by the government / regulatory body intervention. Instead of having the market correct itself, government could have forced the hospitals to cheat less, charge less.

One argument here is that regulating could mean stunting the growth of the health industry. However, Firstly, the health insurance is not making a hell a lot of money any way. And, health is a social issue and should be looked at as one, and not draw comparisons with life insurance / automobile / retail segment. It is grossly inappropriate. The role of the government / regulatory bodies should be pro-poor (specially in a country with (appx) 60% population living in poverty) and take proactive steps in protecting them. Secondly, have we learnt anything from the financial meltdown? - it is better to act than wait for the disaster (correction) to happen.

Now what will happen (and we have to see how companies tackle this) is that even lesser people will go for health insurance (current penetration of health insurance is less than 10%). This is paradoxical that the cashless facility was taken out to reduce claim ration, but this move is going to hurt the top-line of the company.

Where do you want to settle?

I am not going to write about how to plan for retirement or tell you how much to save for kids etc. Yesterday N and I were considering options about the cities that we can settle in once retired. On the face of it weather and language was considered. Beyond that we were pretty lost on what we think is important for us during our retired life. Here are some points that we pondered over -

Going back to a calmer and more peaceful place is definitely a priority. What we had in mind was something like the Bangalore of old times. Mysore was an option... and so was Shimoga.
Fact: In India alone 15 million people are going to migrate from villages to cities in the next 5 year.
What that means is that the bigger cities are definitely going to be overcrowded (over over over crowded) and at some time Govt will have to look beyond the big cities and focus on tier 2 cities (corporations like IBM are already doing so.. the issue is that these companies are human capital intensive and cannot find required resources in a smaller town. But that is besides the point). So, in all probability, at the rate India is growing (in population and GDP) tier 2 cities of today would have been promoted to tier 1. So, at this point we might as well rule out these tier 2 cities and concentrate on some small towns that have potential of moving to a tier 2 city. But spotting those is nearly impossible at this point.

A more secure place is another important criteria. We dont want to save up for our last 10 years and be shot by some idiot who claims to be a Robin Hood.
I think the Naxalism is reached a tipping point where either the government will grant them their rights or wipe them out of the face of the earth. One way or the other, large portions of India will be rid of mindless violence. I cant say that about inflitration.. because I have more confidence in the Islamic fundamentalism than India's attempt to root them out. So, India will continue crying for US attention and US will continue asking Pakistan to stop cross border terrorism.. and nothing will come out of it.
Back to 'a more secure place' - I think it is too soon to plan.. though a rough idea of the kind of place will keep us happy. But if Naxalism will cease to exist, something else will crop up.

Third criteria was the language. This we can be sure of... more or less. Living in Karnataka, we will want to be among people who can speak Kannada. English or Hindi as second / third language is not too bad. But I would want to say a 'amman' here and an 'akkan' there to digest my afternoon meal.

Where to invest?

With Greece, Portugal, Spain in the firing line, the immediate impact on India is something of a worry. 150 billion is what will be given to Greece. Just a comparative figure, the total remittances into India this year was 54 billion!! (anyway, that's besides the point).

Read (past tense) about the simplified reason for sovereign default. It goes - Govt expenditure is considered as the proven option to get out of recession. This is done by governments taking huge loans to kick start projects, which in turn generates employment. In effect the govt manages to increase GDP enabling the country to pay back the debts. But when the cycle does not complete, and the projects do not convert to employment, everything falls apart. (ah! so it is a project management issues!)

This "govt expenditure to kick start economy' works most times. It worked in the two recessions US went through. May be that is what is meant when you hear - It works most of the times. We know that Japan could not do it and piled on huge debts which, after 20 years, is still deflating. And now it is the EU countries.

So here we are - Markets are going down. Goverment bonds are not reliable. Banks are defaulting. Real estate in China is predicted to be on a collapse. Analysts (Analyst is a make believe position created. They think that the world functions based on the formula they derive by crunching some apparently useful information. Beware!) have predicted that China might collapse in a decade (or was it a year?), which will either leave India as a only prospective super power (yay!) or cause India (and the world) to collapse. So, I wonder, even for a risk taking individual (unlike me), what does one hedge his risky investments against? Gold, may be! Or keep it under the pillow!

CocaCola in Kerala

http://www.outlookindia.com/article.aspx?227376

This is the case with the CocaCola plant in Kerala which details the damage caused to the ground water in that area. The intriguing part is pH factor testing. Outlook (magazine) got the ground water tested from Sargam Metals, Chennai, whose lab is accredited by the government's department of science and technology and Cocacola, in response, got the water tested from R-FRAC which is a reputed, independent, national Accredition Board of Laboratories and ISO 17025 certified Lab supported by Ministry of Food processing industries, govt of Karnataka.

Sargam Metals reported the pH factor to be 3.5 (deadly!) while RFRAC reported 6.89 (potable). The permissible limit is 6.5 to 8.5. What CocaCola did here is not to say that they are not polluting ground water, but made those figures completely irrelevant. If you can fetch a number, so can we.

From my 10th standard Chemistry knowledge, testing pH is not complicated and will not have several parameters that each accredition uses selectively to arrive at the favorable numbers. Makes me suspicious!

Ford going back to basics

Ford Motors started its journey with 1 model.. the much famous Model T over the 100 years ago, and Henry Ford prided over the operational efficiency achieved to produce that one model. At one time Henry ford called CEO of Chrysler (Walter Chrysler) (one of the 2 competitors at that time) a fool for having so many models as he could never achieve efficiency.

Now, over the years, Ford did the exact same thing as the GM and Chrysler. They acquired any brand that was for sale and released new models every so often. And in the course Ford moved from one model to a range of models and brands.

It took a recession and an almost bankruptcy for them to realize that the smaller portfolio of cars and brands is the best way they can run the company. In turn, they now realize (again) that Henry Ford was a smart man to have just one model. :) And that is why you see them selling the JLR to Tata and Volvo to Geely. Good luck to Ford...

Mobile Number Portability

Making a shift - from stories to opinions. An effort to incite readers (if any) to argue with me.

I am waiting for the Mobile Number Portability to come through.

What is the problem - Since the market has opened up to the private players, the private players have become significantly big (in consumer base).. even if we consider only the tier 1 and 2 cities. The bad part is, they are probably so big that they can lobby enough so that the MNP does not come through. And then there is the BSNL and MTNL which still think they are sitting in duopolistic market. There was news that they have not even purchased equipment to test MNP, while DOT has given a deadline of May for implementation. What audacity! All these players on one side, and the (corrupt) government on the other. What a contest this is going to be! :)

So, if MNP comes through, who is to win? consumers. Who is to lose - BSNL and MTNL!

Why I want MNP to happen - not because I have anything personally to gain from it. I am happy with my airtel connection and will probably continue with it. This MNP is a pure market pressure. It is the lever that the government holds to make the market more efficient and price competitive. In the end, probably only a handful will survive and all the existing players will trade off about +/- 15% of their consumer base. With the rock bottom prices, this might be the question of solvency and insolvency.

However, India is nothing new as a market. Historically, MNP has seen opposition from the incumbents in the market. But there are many countries that have implemented it (Australia, for one). Waiting to see how everyone reacts to it in India. What do you think?

Powercuts in Bangalore

Deficient water rains have forced the government to announce power cuts for 4 - 6 hours in Bangalore everyday. Actual power cut everyday is definitely more than this. Rural Karnataka probably will be seeing only a couple of hours of power everyday. People going to office often do not realize the problem. 6 hours power cut means there will not be power for quarter of the day, minimum. For jobless people like me, who quit office 20 days in advance to catch up on movies and read end up swatting mosquitoes. I have to keep my laptop charged for the hours of power cut. A few days back I had to call British Airways to enquire about transit visa requirement. When they asked me for my pnr number I had to tell them that I had it on my mail account and will have to call back when the power comes back! Lots of instances like this. Really frustrated!

How long is this going to continue. A the power we have wasted for so long, the irresponsibility of water usage is now showing up.