Toddlers have not yet learned to distinguish "dada" from other men and so call them all "dada." Likewise, Phil Palmintere ("Why not give everyone a Porsche as well as health care?" Forum, April 5) has not yet learned to distinguish industries in which market forces work (e.g., the automobile industry) from those in which they do not (e.g., the insurance industry).
Market forces work when they compel industries to compete on price and/or innovation. Thus, Porsches evolved from the P1 design of 1898 into engineering marvels.
Innovation, particularly after World War II, made Porsche the profitable company that it is today. Profit, in Porsche’s case, is a reward for creating value for customers.
In contrast, profits in the insurance industry have very little to do with innovation or creating value for customers. Innovation in the insurance industry centers on actuarial maneuvering that is of no benefit to customers, and creating value is limited to administrative tasks that can be performed at costs amounting to a small fraction of industry profits.
Simply put, the insurance industry creates negative value. One might even say it is parasitic. When burdens placed on doctors’ offices are taken into account, the value deficit is magnified.
Erhard K. Valentin
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