Wednesday, February 24, 2010

A Lesson From Japan (via Fresno)

I don't profess to be a mechanical engineer (nor do I play one on TV), but it seems to me that there's a bigger issue in ToyotaGate than may seem obvious to the casual observer: when Transportation Secretary LaHood opined that one should completely avoid driving one's Toyota, sending an alarming signal to Wall Street and Main Street, he did it as one who has a vested interest in harming that automaker. After all, Toyota is a direct competitor of government-owned GM and Chrysler, who consistently rank behind Toyota in the sales department.

What better way to make a dramatic and immediate dent in the Japanese car company than to declare its vehicles unsafe, regardless of the truth (whatever that may be). If a financial advisor recommends a particular stock, for example, he's required to unambiguously disclose the fact that he owns part of the company issuing it. Why isn't someone in LaHood's position required to make the same "full disclosure?"

What does this have to do with insurance?

When the government runs both parts of the health care system - delivery and financing - then it has a vested interest in doing away with its competition. That's especially critical to the financing (insurance) side: as we've pointed out on numerous occasions, one cannot compete with the government.

We already see this in HHS Secretary Shecantbeserious' call for investigating Anthem's rate increases recently in the news. She (or her successor) will be in charge of all such approvals under the president's "plan." And of course many of us remember the joys of price controls.

If (when?) a version of the so-called "Public Option" is implemented, how can carriers hope to compete when the government is the final arbiter?

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