China Health Care Cost

As China’s medical bills rise steeply, outpacing government insurance provision, patients and their families are increasingly turning to loans to pay for healthcare, adding to the country’s growing burden of consumer debt.

While public health insurance reaches nearly all of China’s 1.4 billion people, its coverage is basic, leaving patients liable for about half of total healthcare spending, with the proportion rising further for serious or chronic diseases such as cancer and diabetes.

That is likely to get significantly worse as the personal healthcare bill soars almost fourfold to 12.7 trillion yuan (RM$7.6 trillion) by 2025, according to Boston Consulting Group estimates. For many, like Li Xinjin, a construction materials trader whose son was diagnosed with leukaemia in 2009, that means taking on crippling debt.

Li, from Cangzhou in Hebei province, scoured local papers and websites for small lenders to finance his son’s costly treatment at a specialist hospital in Beijing, running up debts of more than 1.7 million yuan, about 10 times his typical annual income.

“At that time, borrowing money and having to make repayments, I was very stressed. Every day I worried about this,” said Li, 47, adding that he and his wife had at times slept rough on the streets near the hospital.

“But I couldn’t let my son down. I had to try to save him,” he said. Li’s boy died last year. The debts will weigh him down for a few more years yet.

Medical loans are just part of China’s debt mountain — consumer borrowing has tripled since 2010 to nearly 21 trillion yuan, and in eight years household debt relative to the economy has doubled to nearly 40 per cent — but they are growing.

That is luring big companies such as Ping An Insurance Group, as well as small loan firms and peer-to-peer (P2P) platforms, as China’s traditional savings culture proves inadequate to the challenge of such heavy costs.

The stress is particularly apparent in lower-tier cities and rural areas where insurance has failed to keep pace with rising costs, said Andrew Chen, Shanghai-based healthcare head for consultancy Parthenon-EY.

“It’s a storm waiting to happen where patients from rural areas will have huge financial burdens they didn’t have to face before,” he said, adding people would often take second mortgages on their homes or turn to community finance schemes.

“Typically, what happens in China is the whole family contributes when someone gets a severe disease like cancer,” said Severin Schwan, CEO of Roche Holding AG, the world’s biggest maker of cancer drugs.“When it comes to innovative medicines, the financial burden is just too much. Families can go broke.”

Roche itself has schemes in China to make cancer drugs more affordable, including an insurance scheme developed with Swiss Re.

“If you want to use it for medical bills, cosmetic surgery or plastic surgery that’s all fine,” said Ping An Puhui, which advertises that its loans can “alleviate the pain of illness” and “bring new hope to sick families”.

But there is plenty of anecdotal evidence from online lenders that it is a growing segment. “Our loan numbers have risen steadily, and no small number of people have used these for medical purposes,” said customer service worker at P2P lender ppdai.com Li Jin.

Some desperate patients are pawning their personal belongings. “They use things of various value from jewellery to purses and even cars,” said office worker at online lender minbaodai.cn, Chen Yi.

Pyramid Scheme

Divorce, custody battles, police reports and fist fights. Once, a husband had to divorce his wife and take his children with him after his partner lost the family’s EPF savings to an illegal MLM. These are just some of the repercussions in families ripped apart due to pyramid schemes.

Of the hundreds of cases annually where people claim to have lost their investments to multi-level marketing (MLM) schemes, a majority of them had been convinced to part with their money by their own family members. A participant of a scheme realized that he or she needed to bring in new recruits just to recoup their investment, the first people they would target was family.

It’s easier to influence your cousin or aunty. They trust you. If they see this in an advertisement, they may not believe it but because it’s a relative, they let their guard down. They would either use the convincing tactics that they had been taught by their company or they would emotionally blackmail family members.

People had pleaded with cousins, aunts and uncles to invest in their company because they were not meeting their bottom lines. Some even did it to their friends.If your friends ask you to join their scheme, they are not your friends. They just want to get their money back and are willing to use you.

Nanning Green City Scam

It is known as the “Green City” for its tropical foliage and Malaysians are heading there daily -captivated by promises of riches that could come their way. Dozens of Malaysians are being taken every day by syndicates on all-expense-paid trips to Nanning, a southern city in China near the Vietnam border.

These “investors”, were hoping to cash in on a supposed property boom there. Sadly, greed is their downfall. Many of them fall prey to so-called Nanning investment schemes. 

The city was growing rapidly with plenty of business opportunities. But why do you have to go through multi-level marketing using a pyramid schemes. Investors paid between RM80,000 and RM150,000 to become members and given ‘shares’ or ‘units’ in return. However, these “investors” soon found out they could not recoup their capital unless they recruit more members to join the scheme.

“No one is willing to make a police report. Some are still hoping they can get their money back. Others are just too embarrassed because not even their spouses know that they have used up their savings on the ‘investment. 

Helping Hand For Mumpreneurs

E-COMMERCE marketplace Shopee has committed RM1mil to nurture and empower mothers to be entrepreneurs (also known as mompreneurs). As a first step, Shopee will be extending its free shipping programme to July to encourage these mompreneurs to expand their business.

Mompreneurs will be educated about e-commerce via Shopee Uni­versity as well as online and offline marketing campaigns to help them sell their products over Shopee.Shopee, which has over one million users in Malaysia, said to date, more than 20,000 sellers have signed up with the company since the launch of its free shipping programme in collaboration with Pos Malaysia.

A substantial number of sellers on the programme has seen an increase of two to three times their daily orders while some have seen an increase of up to ten times. Through the sale of products like cosmetics, fashion, household and baby supplies, these mompreneurs are now given the chance to increase their disposable income.

The encouraging results spurred the company to allocate RM1mil to further groom mompreneurs, said Shopee regional managing director Ian Ho. There are three barriers that mompreneurs face in starting their online businesses – high costs, insufficient knowledge on how to sell online and lack of marketing exposure, said Ho.

“We aim to have 10,000 mompreneurs selling on Shopee by the end of the year,” added Ho.To kickstart this initiative, Shopee will be launching its Mighty Moms Challenge where 20 mompreneurs would first be educated in Shopee University and then compete amongst themselves to be the top seller in Shopee.

In line with Shopee’s ongoing efforts to empower the community, participants would include mompreneurs from the Women’s Aid Organisation (WAO) -- a non-profit organisation in Malaysia for women survivors of domestic violence and their children.

Ali Baba & Jack Ma

Lawsuits and investigations are an opportunity for Alibaba Group Holding Ltd to be better understood, founder and executive chairman Jack Ma said in an interview on Saturday. The U.S. Securities and Exchange Commission (SEC) launched a probe earlier this year into the Chinese e-commerce firm’s accounting practices to determine whether they violated federal laws. Questions about Alibaba’s growth rate and its relations with affiliated companies have dogged the firm for years.

If you want to sue us, sue us. It’s an opportunity for us to let them understand what we’re doing,” he told Reuters, saying he had complied with SEC requests but did not know when the U.S. agency would respond with a finding. Ma was speaking after the first day of a two-day philanthropy conference hosted by the Alibaba Foundation, a charitable organization established by the group.


He said Alibaba had been transparent and provided the SEC with everything it had asked for.In 2014, the now 51-year-old Ma and Alibaba co-founder Joe Tsai pledged share options worth about $3 billion at the time to a newly established charitable trust in the biggest donation of its kind in China.

It took the Jack Ma Foundation a year to register, said Ma. China boasts more billionaires than anywhere else in the world, yet lags in public philanthropy as the wealthy prefer to keep a low profile.

Ma, who has a net worth of $21.8 billion according to the 2015 Forbes Rich List, said Chinese culture warns that nothing good will come of having a high profile, adding that his dad sent him a message on Friday advising him to keep his low.

Ma said that many private non-government organizations in China were not considered “authentic”.
We find the system does not work, so people stop and say what am I going to do, so sometimes people like us, we do it on our own,” said Ma.

Critics say the environment in China for NGOs has become more restrictive this year.

In new laws governing charities and non-government agencies brought in the first half of the year, the government has sought to rein in groups that endanger national security, which commentators say gives Beijing the right to close groups as they wish.

In April this year, the founder of China’s Tencent Holdings Ltd, Pony Ma, said he plans to donate 100 million company shares, worth more than $2 billion, to a new charity fund in the second biggest philanthropic pledge after Jack Ma’s.

AirAsia Special Offer

AirAsia has agreed to refund army veteran Bob Musgrove here whose flight was cancelled by the airline. According to the Gold Coast Bulletin this happened after the newspaper intervened on behalf of the frustrated 76-year-old.

Musgrove had booked a cheap, special return airfare from Brisbane to Goa in India with Air Asia almost a year ago. But the budget carrier cancelled his flight in April — when it axed the Kuala Lumpur-Goa route — and he had spent the past three months trying to get a full fare refund of A$641.69.

This caused him further problems as he had booked a further A$3,500 worth of connecting flights and hotel nights in other countries which were reliant on him getting to Goa.He said because of the cancellation, his holiday had become more expensive.

While happy about finally getting a result and thankful to the Gold Coast Bulletin, Musgrove said it had been a stressful three months.

According to the report AirAsia had initially declined his refund request and then after multiple arguments via email the airline told him a refund would be processed within 30 working days.
After the Gold Coast Bulletin inquired, AirAsia promised to send the refund within seven days.

The report quoted Musgrove as saying he would never book with AirAsia again.

Churning Life Insurance Policy

A detailed survey by the Financial Markets Authority (FMA) indicates that there is a significant amount of churn in the life insurance industry, to the possible detriment of consumers.

Many people will be unsurprised by the finding, but will appreciate the research to back up their impressions. The empirical evidence provides a helpful measure of the extent of the problem, and should provide a solid foundation for future reforms.

Survey design

FMA surveyed the last four years of data from the 12 main life insurance providers in New Zealand. The period covered was April 2011 to March 2015 and included four types of cover: life, trauma, income protection, and total and permanent disability.

Particular interest was paid to registered financial advisers (RFAs) and Authorised Financial Advisers (AFAs) with more than 100 active life insurance policies on their books or who had a high rate of replacement business.

Key findings

• The number of policies grew at under 2% each year over the review timeframe but in those years, the survey group described 11% to 13% of their policies as “new”, suggesting they were probably replacement policies.
• The majority of advisers do not have high levels of replacement business. 200 out of 1,100 of advisers who currently have a book of more than 100 active life policies, have a high estimated rate of replacement business. Those 200 advisers earned almost 50% more from commissions compared to the others.
• Policies with a high upfront commission were more likely to be replaced once the commission clawback period ended (the period within which an adviser must repay a portion of their commission if the policy is cancelled).
• The quality of the new policy was only a minor factor in whether it was replaced, indicating that some advisers are putting their self-interest ahead of the consumer’s interest.
• Policies no longer subject to commission clawback were 2.2 times more likely to be replaced if the advisor was offered an overseas trip as an incentive.
• RFAs had higher rates of replacement business than AFAs, some replacing more than 35% of their life policies in one year.

Concern that adviser incentives are driving insurance policy churning have been openly discussed worldwide and have led to commission bans in some countries. Rightly, in our view, banning commissions is not government policy in New Zealand. But other responses to insurance policy churning will need to be developed.