Jeevandayee scheme offered by Maharashtra Government provides health insurance cover up to Rs1.5 lakh for families earning less than Rs1 lakh per year. Will the genuine customers be given treatment and false claims denied? Find out the progress and hurdles
The State Government of Maharashtra has launched Rajiv Gandhi Jeevandayee Arogya Yojana (RGJAY) in order to improve medical access facility for both Below Poverty Line (BPL - Yellow card holders) and Above Poverty Line (APL- orange card holders) families. RGJAY is already implemented in eight districts including Mumbai and would be implemented throughout the state of Maharashtra in phased manner for a period of three years.
Find out more about the scheme - http://moneylife.in/article/rajiv-gandhi-jeevandayee-arogya-yojana-what-you-need-to-know/30348.html
As with any other well-meaning government health insurance scheme, RGJAY has been having problems in implementation. There have been reports of some private hospitals profiting from unnecessary surgical procedures and high-cost procedures instead of treating the patient by medicines.
Clearly, the hospital business depends on number of procedures done. The State Government has purchased the insurance cover from National Insurance Company (NIC), who pays the hospitals for any procedures that are performed. There are limited numbers of good private hospitals on the panel of RGJAY and hence it may be difficult from RGJAY society to taken stern action against errant hospitals.
According to Dr Raju Jotkar, assistant director, RGJAY, “Given the infancy of RGJAY since inception on 2 July 2012, it would be too early to pass on any such judgements without any tangible evidence. However each network hospital is under scanner of RGJAY.”
RGJAY has implemented processes to ensure that the cracks in the system for pilfering are covered. Dr Raju Jotkar, says, “The network hospital is likely to opt for high-end package over low-end wherever feasible. However, the built-in preauthorization review for each request by network hospital by insurer as well as RGJAY society (Government) offers an opportunity to control such demands if any in light of evidence. The two layered scrutiny removes all biases as well as detect the unreasonable requests precisely. Moreover, RGJAY have reserved 132 procedures having risk of abuse to public network hospitals only. Over and above this oversight and vigilance mechanism helps to capture any misbehaviour or irrational requests of network hospitals.”
RGJAY society has paid NIC premium of Rs333 per family (service tax extra) for about 49.2 lakh beneficiaries, of which two quarterly premiums have been paid till date. It means they have paid the insurance company premium of Rs82 crore for two quarters ending December 2012. There has been media report a month ago of the insurance company already having paid Rs60 crore in claims and that they have refused to extend its services beyond the present eight districts as it is dubbed as a loss-making proposition. Dr Jotkar is tight lipped about it with the response “It would be prudent to pose this question to NIC.”
While the steps taken by RGJAY society will help ensure that false claims are denied, how will it ensure that genuine customers are given treatment? The first level of authorisation for the procedure is from insurer or rather TPA (third party administrator). With heavy incurred claims within two quarters of the scheme launch, will the insurance company (or TPA) keep its profit margin by refusing approval for the procedure? Even though it cannot be asserted at this time, it is all too familiar with other Government schemes like Rashtriya Bima Swasthya Yojana (RBSY) in Maharashtra.
Maharashtra Government had sought a probe by the Central Bureau of Investigation (CBI) into non-settlement of claims by insurance companies under RBSY, Labour Minister Hassan Mushrif told the Legislative Council. The labour minister conceded that the RBSY scheme was tailor-made for insurance companies to earn profit. In Maharashtra alone, Rs215 crore were paid as premium and claims of Rs134 crore were not settled by the insurance company.
In the third part of the series we will cover details of insurance company and TPA payment for RGJAY insurance cover. Gaurang Damani, well-known activist, had filed an RTI query to find about the TPA incentive to reduce claims ratio.
Gen Singh has also been named in an FIR by the Delhi Police for his alleged role in protests against the gang rape of a girl in a moving bus on 16th December
New Delhi: The Union Government has decided to withdraw all security cover provided to former Army Chief Gen VK Singh, who has been taking part in a number of protests over corruption, Delhi gangrape incident and other issues, reports PTI.
The former Army Chief was provided Z 'Plus' security cover till 30th November but in a review meeting, the Ministry of Home Affairs took a decision that he does not require any protection, Army sources said here.
After the decision was conveyed to the Army Headquarters, it is in the process of withdrawing all vehicles including a bullet-proof car and around 30-35 personnel from his security, they said.
Seven vehicles and 30-35 personnel were deployed in his security duties round the clock, they said.
Gen V K Singh, who retired on 31st May, was given a Z Plus security cover till 30th November and he was allowed to stay in Government accommodation in Delhi Cantonment area for one year after he had sought a nine-month extension from Defence Minister AK Antony.
Singh has been named in an FIR by the Delhi Police for his alleged role in protests against the gang rape of a girl in a moving bus on 16th December.
Soon after his retirement, he was critical of the government on various issues and shared the stage with yoga guru Ramdev and Anna Hazare on Lokpal and blackmoney issues.
On the gang rape issue, he had recently said the system stands "completely exposed and defanged" as not just one daughter, but hundreds of others are equally vulnerable to predators in the face of "growing impotency" to take any action.
In late November, he had also called for the dissolution of Parliament and had called for its gherao in support of the demands raised by sugarcane farmers from Uttarakhand and Uttar Pradesh.
In the last few months of his tenure, he became the first Chief of the Army to have approached the Supreme Court against the Government on the personal issue of his date of birth.
In the first part of this series, we reported Bill Ackman’s analysis of Herbalife’s business, which consistently achieves high sales of a commodity product despite extremely low advertising and technological input. So, how has it grown so fast over the past 30 years? This is where Herbalife’s business model, which ensnares many millions, comes in
Bill Ackman, the famous hedge fund investor, has torn apart Herbalife’s products to show that the company is worth nothing. The company is very active in India, too, having made its entry in around 2000. In this short span of time, the company has managed to sell a lot of product, mainly through high-pressure sales tactics and promotion of the glamourous lifestyle of those at the top of the pyramid. In this article, we will elaborate on Ackman’s analysis and discuss why Herbalife’s pyramid fails to provide the rewards it promises.
Click here for the first part of our Herbalife story.
According to Bill Ackman, Herbalife markets itself as a sort of an annuity that will bring the consumer ever-increasing income, even well into retirement. Consumers are shown a chart of this, but despite how unbelievable it is, it is what sucks in those who double up as entrepreneurs.
In order to make money, all the consumer has to do is recruit (or sell), say 155 more people, and will soon be earning as much as $44,150 per month! One of the 155 people could be a family member, too!
Once a product is sold, a distributor/salesperson is deemed to have been ‘recruited’. There are two ways to make money—from selling a Herbalife product (and thereby recruiting another person) and from ‘rewards’.
In order to be eligible for ‘rewards’, one must move up the pyramid. And how does one move up the pyramid? Recruit and sell more to become a ‘sales leader’ and then accumulate volume points to graduate to higher tiers which will entitle you to larger compensation.
However, if you are looking to become rich quickly and yearning for that Ferrari, the distributors who are above recommend recruiting people more vigourously rather than just selling at your own pace.
Herbalife says that one can aspire for a lavish lifestyle in as little as three years. John Tartol, a Herbalife director, said that one can make it to the top, to the “Presidential Team” in less than three years. Claims like these are often touted by distributors at the top of the pyramid in order to lure more consumers.
But what is the reality? As you would expect in a pyramid scheme, the top 1% of the recruiters/distributors earn 88% of all the ‘rewards’. A pyramid scheme, after all, is one in which money made at the top is made from the losses of the people at the bottom of the pyramid. How does one get to the 1% and earn lots of money and rewards? Most of the people at the bottom usually get lured by emotional testimonials and success stories, often from the top 1%—who own expensive cars or large mansions, etc—only to be disappointed when the pyramid fizzles out or becomes saturated.
Getting to the top is much harder than advertised. In Ireland, in 10 years, not a single ‘distributor’ made it to the “Millionaire Team” (one tier below the “Presidential Team”). The failure of the MLM business model becomes so apparent within months that many people have dropped off and lost faith, lost a lot of money and their livelihood. It is pertinent to note that failed distributors have lost as much as $3.8 billion since Herbalife’s inception in 1980, according to Ackman. Yet MLMs flourish, mainly because regulators and investigators, both in the US and India, have taken a soft line.
Recruitment is continuous, but drops drastically when the market saturates (i.e. when there aren’t many suckers to sell to) and there will be a sharp drop in retail sales (i.e. when the pyramid starts to tumble), the so-called ‘pop-and-drop’ phenomenon. In mature markets, such schemes have fizzled out. It’s emerging markets where the playground for MLM schemes is ripe.
Herbalife has targeted India, too, where regulation is spotty. In 2010, Herbalife’s CFO called India one of the “top 10 markets”. When they entered India, few knew what a global pyramid scheme looked like.
Herbalife is reportedly involved in window-dressing of their financial accounts to paint a rosy picture. According to Bill Ackman, the company has, among other things, misstated gross earnings and failed to disclose several expenses.
In fact, the number of “sales leaders” (i.e. people who have qualified for ‘rewards’) have declined and the company had stopped disclosing this figure. This shows that the market may be near its saturation point. When this happens, Herbalife will target another market, another country.
Mr Fitzpatrick, author of False Profits, who has written about the dangers of such MLMs, says, “Verified data show that 'success' in MLM schemes is less than 1% per year for consumer investors. Profit comes only from investments from other poor investors, nearly all of whom are destined to lose. If this is the case, and it is occurring on a significant scale, it means that MLM may be corrupting the micro-credit lending field, which is operating in many of the world's poorest countries.” The fact that India was one of the biggest markets for Herbalife makes it more obvious that a regulatory overhaul is a must. But who cares?