Yarmuth Votes to Increase Competition in Health

 Insurance Marketplace

New Legislation Will End Exemption from Antitrust Law for Insurance Industry, Increasing Competition Among Insurers and Helping Control Costs for Consumers

Congressman John Yarmuth (KY-3) voted to put an end to the antitrust exemption on health insurance companies and create new competition in the insurance marketplace, as the House approved the Health Insurance Industry Fair Competition Act by a vote of  406 to 19. That legislation will give health insurance companies competitive incentives expected to enhance the affordability, quality, and choice of plans available to consumers.

“Currently in Kentucky, one insurance company controls 59 percent of the market. Year after year, that lack of competition means Louisvillians are stuck with higher premiums and fewer choices,” said Congressman Yarmuth. “This legislation is a critical step forward to help create more affordable, high-quality health insurance options for American families in a more competitive marketplace.”

Since 1945, health insurance companies have been exempt from federal antitrust law. Currently, only health insurers and Major League Baseball have such an exemption, and 94 percent of all insurance markets are considered “highly concentrated” – meaning consumers have little or no choice between insurance providers.

In Kentucky, the top two insurers control 69 percent of the market.

Supported by groups leading consumer groups such Consumer Federation of America and the Consumers Union as well as the National Association of Attorneys General, removing the antitrust exemption is expected to increase competition in the marketplace between insurers and contain costs and increase benefits for working families.

The Health Insurance Industry Fair Competition Act would also give the U.S. Department of Justice and the Federal Trade Commission the authority to investigate evidence of collusion and price fixing in the insurance industry for the first time in 65 years.

Peacocks Versus Progressives

As the Obama administration and Congress deal with the country's economic problems -- including double-digit unemployment, a housing crisis, credit shortage, and stagnating wages -- one issue that has fallen under the radar is that states across the country are facing serious budget crises.

Faced with budget shortfalls that total hundreds of billions of dollars, state legislatures are contemplating ways to close their gaps. These legislators have a choice: They can choose the path of the "deficit peacocks," who demand cutting social spending while ruling out tax increases on those who have benefited immensely from years of conservative policies. Or, at a time when the tax burden between the wealthy and the middle class is "narrower than at any time in modern history," they could instead look for ways to responsibly raise revenues while protecting their states' spending on vital programs like children's health care and education.

It is instructive to look at how the response of both conservative and progressive state governments differ. And while it is important for state legislators to balance their budgets in progressive ways, it should be noted that the federal government also has a role to play by including generous aid to cash-strapped states in congressional jobs legislation.

STATE PROGRESSIVES: Progressive-led state governments, on the other hand, are asking their states' most prosperous citizens -- who often pay the lowest effective tax rates, according to a recent report from the Institute on Taxation and Economic Policy -- to sacrifice a little so that spending on the most vital programs, like education and health care, can be protected.

New York was expecting a $16.2 billion deficit for 2009, but progressive legislators chose to raise taxes on its wealthiest citizens, raising more than $5 billion and staving off the need for deeper cuts in social services. In Wisconsin, Gov. Jim Doyle (D-WI) led the charge to raise taxes on wealthy Wisconsinites to help blunt the need for budget cuts in the face of the "largest budget shortfall" in the state's history.

The state "enacted a new 7.75 percent income tax bracket on all income over $300,000 for married couples and $225,000 for individuals and heads of households. And the exclusion for capital gains income was lowered to 30 percent from 60 percent."

These measures generated an extra $280 million for fiscal year 2010. Thanks to these progressive steps, Wisconsin was able to limit cuts on public school funding to 2.5 percent (rather than the 6.1 percent without the tax increases) and increase funding for Wisconsin's technical colleges and children's health insurance programs. With a $2.5 billion projected budget shortfall between 2009 and 2011, Oregon was on the verge of having to make deep cuts to education spending, freeze public employee salaries, and ending forest protection rules.

Oregon progressives organized and triumphed over a corporate-backed propaganda campaign to successfully convince voters to "handily" pass ballot measures that increased taxes on the wealthiest Oregonians, phased out an expensive tax expenditure, and increased the corporate minimum tax rate from a paltry $10 a year while not raising taxes on 97.5 percent of taxpayers and 93 percent of businesses. The measures protected $1 billion in services.

CONGRESS'S ROLE: While the importance for state legislators to turn to progressive solutions to balancing their budgets cannot be stressed enough, the severity of the budget crises means that the federal government must play a role as well. The Center On Budget And Policy Priorities notes that the aid to states included in the stimulus package has "averted many job-killing budget cuts" in state budgets, and further federal aid to the states would have a similar effect. Last month, the House of Representatives stepped up to this responsibility by passing a $155 billion jobs bill that includes "$75 billion of bailout funds to pay for more infrastructure projects and assistance for cash-strapped states."

Unfortunately, the Senate has not followed suit. Its $15 billion jobs bill lacks any major aid to states, and has been criticized by progressive economists and labor leaders. "If this $15 billion was the only thing [that passed], that would be like having an amputated arm and sticking a Band-Aid on the end of it," said AFL-CIO president Richard Trumka Friday. As Center for American Progress Senior Fellow Heather Boushey writes, the "Senate should match -- or increase [the] investment" that the House makes in aiding state budgets. 

The Progress Report [progress@americanprogressaction.org]
 

A new government report on our "broken health care system" details how "insurance companies prosper" as "Americans suffer," underscoring the urgency of reform. Profits for the 10 largest insurance companies "increased 250 percent between 2000 and 2009, ten times faster than inflation," and "the CEOs of America’s five largest insurers were each compensated up to $24 million in 2008."

With Sarah Palin back in the spotlight, Tina Fey says that she will "try" to reprise her famous role as the former Alaska governor for Saturday Night Live. "We'll see if it makes it to air," she added.

During an interview with Fox News last week, former Arkansas governor Mike Huckabee "blasted the Conservative Political Action Conference...as outdated, nearly corrupt and unrepresentative of the conservative movement." "CPAC has becom[e] increasingly more libertarian and less Republican over the last years, one of the reasons I didn't go this year," Huckabee told a Fox host.

More than two dozen unions and liberal groups, including the AFL-CIO, the NAACP, and the National Council of La Raza, have dismissed Senate Majority Leader Harry Reid's (D-NV) new $15 billion jobs bill as "puny." "If this $15 billion was the only thing [that passed], that would be like having an amputated arm and sticking a band aid on the end of it," said AFL-CIO president Richard Trumka.

With President Obama "largely silent on the issue," states "are engaged in a new and largely successful push for expanded gun rights, even passing measures that have been rejected in the past." For example, the Virginia General Assembly "approved a bill last week that allows people to carry concealed weapons in bars and restaurants that serve alcohol."

Former House Speaker Newt Gingrich said yesterday that many Capitol Hill staffers have never worked at a real job. "Of course it's the nature of the modern Congress, which hires lots of nice young staffers who have never had a real job," said Gingrich. He added that they "spent their entire life being arrogant to visitors from back home" and "write legislation as though they have some contact with reality."

Toyota unable to sweep troubles under the floor mat

By Roger Simmermaker

Toyota should be toast by now. In fact, the only difference between ‘Toyota’ and ‘toast’ should be that the word ‘toast’ has the letter ‘s’ in it and Toyota doesn’t.

But of course I have to use the phrase ‘should be’ because Toyota is so well-connected in Washington, DC that it can never be clear if the Japanese car company will reap the just rewards for what it’s been sowing, which include a blatant disregard for safety, attempting to sweep that disregard for safety under the floor mat, and then actually blaming many of their problems on the floor mat.

According to the investigative reporting of the Associated Press, the contribution of common sense to the issue of Toyota’s unprecedented volume of recalls in the past few months will surely have to overcome plenty of political obstacles. And we don’t even have to worry about the Alabama senators (Richard Shelby and Jeff Sessions) that headed the “drop dead Detroit” team when the American automakers were getting raked over the coals for non-safety issues like financial problems and flying private jets. Senators Sessions and Shelby have been remarkably silent this time around.? Anyway, here are some of the major political obstacles.

1.  Top investigator in the massive safety-centered recalls is Toyota cheerleader Senator Jay Rockefeller (D, WV) who routinely credits himself with successfully lobbying Toyota to build a factory in his state in 1996. Rockefeller bragged in 2006 at the 10^th anniversary celebration for the West Virginia plant that “By the time Toyota decided to make Buffalo [WV] its new home, I felt like a full-fledged member of that site selection team.”

2.  House investigative panel member, Rep. Jane Harman (D, Ca.), represents the district where the Japanese automaker’s U.S. subsidiary resides. Rep. Harman and her husband Sidney own over $100,000 in Toyota stock according to their latest financial disclosure report. Sidney Harman is also the founder of Harman International Industries, which sells vehicle audio systems to Toyota. Rep. Harman also paid tribute to the late lead Toyota engineer David Hermance on the House floor after he died in plane crash in 2006, referring to him as the “Father of the American Prius.” The American Prius? The one made by a Japanese company in Japan?

3.  Senate minority leader Mitch McConnell (R, KY) who remarked at the 20th anniversary of the Toyota Kentucky plant in 2006 that “Kentucky is still reaping the rewards of its 20-year partnership with Toyota, and we hope to continue to do so for years to come.” The Toyota Kentucky plant? The one that was constructed by Ohbayashi Corporation of Japan with Japanese steel? The one that received its financing by Mitsui Bank of Japan? The one that paved the way for a special trade zone so Japan could import parts duty-free? The one where we gave away 1,500 acres of free land to Toyota? The one where federal and state government grants totaled over $100 million?

4.  Current NHTSA chief David Strickland, who worked under top Toyota recall investigator Senator Jay Rockefeller, as a lawyer and senior staffer for eight years.

5.  Main federal government liaison for Toyota, Christopher Tinto, who worked for NHTSA’s Office of Vehicle Safety Standards dealing with truck braking standards.

6.  EPA Clean Air Act Advisory Committee member (and Toyota executive) Tom Stricker.

And we can’t forget the prominent people on Toyota’s diversity advisory board, such as Clinton administration Cabinet Secretary and co-chair of President Obama’s presidential campaign Frederico Pena; Former Labor Secretary (Clinton administration) Alexis Herman; Former republican representative turned lobbyist Susan Molinari; and former U.S. Equal Opportunity Commission chairman Gilbert Casellas.

It’s fairly safe to say that if it had been GM or Ford’s head on the chopping block, foreign car lovers would be railing against Detroit and once again calling for their demise. It’s already obvious that Toyota’s American defenders and apologists cry foul about their perceived unfair treatment in the media and by congress. Over 100 Toyota dealers plan to rally in Washington this week. One Iowa Toyota dealers has been telling customers that Toyota’s safety problems aren’t due to flaws in their cars, but rather they are due to an overzealous media. Really? That’s going to be a tough one to back up.

Such injustice claims are hard to authenticate given the thrashing the Big Three took on Capitol Hill during the bailout hearings or the intensity of the John McCain-led inquisition into Ford’s role in the early 1990’s SUV rollovers involving Firestone tires.

Akiko Fujita, a Tokyo reporter for Public Radio International (PRI), said on February 2 that “Toyota’s success story has long been a source of National pride in Japan.” But founder Kiichi Toyota launched the company in the 1930’s after visiting Ford’s Michigan factories.

And how does one come to the conclusion that any car company is truly a success to be revered? In America, one would think to consider an auto company’s market share here. At the close of 2009, GM had a U.S. market share of 19.5%, which jumped to 21% in January this year even as it was cutting its number of brands from eight to four and reducing fleet sales. Toyota ended 2009 with a 17.9% U.S. market share, which plunged to 14.1% in January. Also in January, Ford passed Toyota in U.S. market share at 16.7% after ending 2009 with a 14.1% U.S. market share. So much for the claim American companies don’t build cars Americans want to buy. GM and Ford’s number one and number two market share, respectively, is sufficient proof Americans do like American cars.

With almost any other country you consider, there is an American automaker with a higher market share percentage than Toyota. According to Automotive News, GM lost the number one market share crown in Mexico for the first time in 14 years to Nissan. Toyota didn’t make the top five. Volkswagen was third, Ford was fourth, Chrysler was fifth.

In China (now the world’s largest automotive market), GM has the number one market share. According to a February 11 article on the website TradingMarkets.com, Toyota’s 2009 sales in China were the lowest in 31 years. The stated reason was “the quality of its car models.” Toyota ranked fourth in Chinese market share as of November 2008.

In Europe, Ford comes in third with a 9.2% market share, while Toyota’s market share is less than 6%. GM-owned Opel’s share alone of the European market, not even including Chevrolet, is nearly 7%. And Ford outsells Toyota in Russia.

So let’s recap. GM beats Toyota in the two largest auto markets in the world (the U.S. and China) but it’s GM that isn’t building cars people want to buy?

Actually, Toyota has been a failure in the United States when you consider its advantages and its inability to capture the number one market share crown. In 2004, GM spent $5.2 billion on health care for its workers and retirees, or about $1,500.00 extra per vehicle. By comparison, Toyota and Honda only spent a few hundred dollars on health care per vehicle, mainly because GM has been making cars here for a hundred years and Japanese automakers only have been making cars here since the 1980s.

Now let’s say you and I both go into business making similar products in the same industry, and I have to constantly do more with less, having to spend about a thousand dollars more per product than you do. I have less to spend on design, research, marketing, manufacturing, safety initiatives, etc., yet I have a higher market share than you, outselling you year after year. Which company fits the term “failure?” Is GM a failure at 21% market share compared to Toyota’s 14.1% market share? Is Ford a failure, beating Toyota by over 2 ½ percentage points in January? Or with all the advantages of lower legacy costs (health care, pensions, etc.) in America, isn’t Toyota the real failure for not being able to take the top market share spot, having such large built-in production cost advantages?

True pride is rooting for the home team even when they’re down. Baseball fans don’t switch favorite teams according to the standings. They root for the home team even when they aren’t winning. GM and Ford are the home teams, and they’re winning. Just like Japan has national pride in Toyota, we should have equal national pride in our American auto companies. Sure, American automakers have taken hits they certainly deserved throughout their history for various shortcomings, but your favorite baseball team has probably had a scandal before or some other embarrassing moment. Did you switch teams? Maybe some did, but the true fans stayed with their team – the home team.

In my opinion, true Americans stand behind their home teams, especially when they’re in the lead. If your opinion is you should stand up for the away team (Toyota) instead then let me make sure you know at least some facts first that prove Toyota knew it had safety issues in the U.S. and did nothing.

Toyota’s American executive Jim Lentz said on February 1 that the company’s repairs will “solve the issues that we know of.” They clearly knew of other issues. According to a 51-page report by Safety Research & Strategies, Inc. at least 2,262 Toyota owners have reported unintended acceleration causing 815 accidents and 19 fatalities since 1999.

According to a February 10 Wall Street Journal article, when NHTSA wanted Toyota to issue a recall to remove floor mats, “Toyota assured us this would fix the problem,” said NHTSA’s administrator at the time. Toyota was asked if they were sure it wasn’t the gas pedal, and they assured the NHTSA it was just the floor mats. 

But then a Michigan lady was killed in 2008 when her 2005 Camry surged from 25 mph to 80 mph, went airborne, and stuck a tree. Her floor mats were removed days earlier.

On January 19 of this year, two top Toyota executives offered American regulators surprising news in a closed-door meeting. It wasn’t just the floor mats. Toyota was aware of the gas pedal problem for over a year.

According to Jeff Kingston, director of Asian studies at Temple University Japan, there is a Japanese proverb, “If it stinks, put a lid on it.” On February 4, Japan’s transport minister Seiji Machara said Toyota denied problems existed and was not sufficiently sensitive enough to complaints. Still want to believe Toyota wasn’t hiding anything?

On the same day, Toyota president Akio Toyoda, a full two weeks after the gas pedal safety recall, finally spoke up and apologized for the “inconvenience” to consumers. I’m sure those who had funerals for family members and friends didn’t quite think of it as an “inconvenience.”

Go ahead and have your pride in your Toyota if you want. It’s definitely not national pride or pride in the home team. I can understand Japan wants to have pride in their national champion, even when they are down, but we as Americans should have our national pride in our winning national champions, too. The failure of Americans to root for the home team is, to me, un-American.

***************************************************************************

Roger Simmermaker is the author of How Americans Can Buy American: The Power of Consumer Patriotism and writes "Buy American Mention of the Week" articles for WorldNetDaily.com and his website www.howtobuyamerican.com. Roger is a member of the Machinists Union and National Writers Union, has been a frequent guest on Fox News, CNN, and MSNBC, and has been quoted in the USA Today, Wall Street Journal and Business Week among many other publications.