Tuesday, April 6, 2010

HR 3059...Why You Should REALLY Hate The Insurance Industry

If you hadn't noticed, he insurance industry has taken some heat recently.  As I argued here, the problem with health care lies with costs of inevitable claims, not what I'd call insurable, unexpected risks. 

As much as you've read about health care, I'm certain you haven't read a thing about HR 3059.  This innocuous piece of legislation seeks to overturn the entirety of the U.S. patent system.  Who seeks to cause such devastating harm to our nation?  The lizard and that nice girl in white.  That's right: Auto insurers. 

They want replacement part manufacturers to have the freedom to duplicate patented parts if they serve only cosmetic functions.  What does that mean?  I live in overly congested New Jersey.  Any part of the car that will cause it to drive over 35 mph might as well be cosmetic. 

Who decides what's cosmetic?  Did the patent office really grant a patent on something entirely cosmetic?  Sounds strange, but okay.  I'll leave those arguments to the attorneys. 

But wait, this legislation won't even keep insurance rates down!  Reduce the cost of replacement parts, and you reduce the total dollar cost of insurance (if you are lucky,) but you do nothing to the cost of insurance per dollar of value insured.  You also do nothing for the guy who says I want OEM parts.  Most certainly you decrease the margins for the auto manufacturers, (you stole their intellectual property so it must hurt them!) and increase the margins for the replacement part knocker-offers. (Sounds like a good word, yes?)

So, if you are convinced the insurance companies are a vast conspiracy to rip-off America, this time you may be right.  Who knows, maybe this is just a dry run for eliminating patent protection for pharmaceuticals and medical devices too?

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