USA Today International - 30.08.2019 - 01.09.2019

6A❚ FRIDAY, AUGUST 30, 2019❚ USA TODAY MONEY

If President Donald Trump were

able to actually order American busi-

ness out of China, General Motors

would take a massive hit.

Though most of its profits come

from North America, the company

makes 43% of its annual global vehicle

sales in China.

“The number one loss to GM, if

forced to leave China, is the loss of all

the future growth potential,” said Jon

Gabrielsen, a market analyst who ad-

vises automakers and suppliers.

“Since they already sold off their Euro-

pean operations ... GM would essen-

tially be almost only a North American

company.”

The problem with that is that North

America doesn’t have growth capacity.

China, already the world’s largest auto

market with a burgeoning middle

class, does.

In the series of tweets Friday,

Trump said China has “stolen” vasts

amounts of money from the United

States for decades and it must stop.

“Our great American companies are

hereby ordered to immediately start

looking for an alternative to China, in-

cluding bringing your companies

HOME and making your products in

the USA. I will be responding to Chi-

na’s Tariffs this afternoon.”

National security law

Saturday, responding to doubts and

criticism, Trump tweeted that he has

the authority to force U.S. businesses

to leave China.

He cited the International Emer-

gency Economic Powers Act of 1977, a

national security law that has been

used to target terrorists, criminals and

outcast countries such as Iran and

North Korea. Critics say it is not meant

to target a major trading partner over a

tariff dispute.

Leaving China would wreak havoc

on GM’s globalization strategy and

ding its profits. In 2018, GM China con-

tributed $2 billion to the carmaker’s

bottom line.

GM issued a statement in response

to Trump’s tweet:

“We support a positive trade rela-

tionship between the U.S. and China,

and urge both countries to engage and

pursue sustainable trade policies. We

continue to believe both countries val-

ue a vibrant auto industry and under-

stand the interdependence between

the world’s two largest automotive

markets.”

The Alliance of Automobile Manu-

facturers had no reaction to Trump’s

tweets but had issued a statement in

response to China’s latest tariffs on

U.S. imports:

“We believe that move is unfortunate

for consumers and the entire auto sec-

tor. We think customers win when trade

barriers are lowered. And we know that

the auto industry can thrive when

there’s a robust and competitive trading

environment between two of the

world’s largest economies. Automakers

encourage all parties to take actions

leading to a healthy trade relationship

between China and the United States.”

The unthinkable

Trump has used threats to negotiate

with foreign powers before. In May,

Trump tweeted that he would impose

escalating tariffs on Mexico “until such

time as illegal migrants coming through

Mexico, and into our Country, stop”

seeking to pressure Mexico to block mi-

grants fleeing Central America to seek

asylum in the United States. Some

American automakers could have lost

billions if that tariff had happened.

“It’s highly unlikely GM exits China,”

said David Whiston, equity strategist of

U.S. autos for Morningstar Research

Services. Most experts agreed.

Whiston said Trump invoking the

1977 national security act “would be

fought in court by every major American

multinational out there.”

Marina Whitman, retired professor

of business administration and public

policy at University of Michigan, said

“there appears to be disagreement as to

whether President Trump can force

companies to leave China or not.”

But, she added, “I can say with some

confidence that if he were to try to do

that, he would be hit with a barrage of

lawsuits and a lengthy legal wrangle.

He’d be using that power in a way it was

never used before. The result would be

horrendously expensive to companies.”

Trump’s threat is more likely a nego-

tiating tactic to get people’s attention,

but, she said, “What it really does is in-

crease companies’ uncertainty of the

future ... which has a negative impact on

the U.S. economy.”

Indeed, GM said its business in China

repatriates money to the U.S. by paying

the company a dividend of about $2 bil-

lion each year. Also, many of the vehi-

cles sold there are designed and engi-

neered in North America, which boosts

employment, a GM spokesman said.

Trump’s China

‘order’ would

cost GM billions

If forced to leave, firm

would miss growth

Jamie L. LaReau

Detroit Free Press

USA TODAY

A Chinese shopper peruses a Buick lot

in Beijing in 2016.

FILE PHOTO BY GREG BAKER/AFP/GETTY IMAGES

Stokes, director of fraud prevention for
AARP.
Lately, she said, some con artists
even have begun telling people that
their Medicare benefits will be cut if
they don’t agree to take this free DNA
test.
Callers may claim to be from Medi-
care and may ask people for their Medi-
care numbers, Social Security numbers
and the like in exchange for DNA testing
kits.
“The callers might say the test is a
free way to get early diagnoses for dis-
eases like cancer, or just that it’s a free
test, so why not take it?” the FTC said in
its alert.
Some consumer watchdogs specu-
late that the DNA-related fraudsters
might be playing off the news this year
when Medicare issued guidance, saying
it would cover on a national basis a Food
and Drug Administration-approved ge-
netic test for patients with advanced
cancer. But again, this is a specific group
that is seeking further cancer treat-
ment.
The Centers for Medicare & Medicaid
Services said it has been notified that
laboratories have been conducting “ge-
netic testing” at health fairs, too. But
these tests – when they’re not ordered
to be necessary by a physician who is
treating the beneficiary – are not eligi-
ble for coverage and payment.

Don’t fall for the cheek swab scam

Medicare is not marketing DNA test-
ing kits to the public.
It’s important that consumers be
suspicious of anyone claiming that ge-
netic tests and cancer screenings come
at no cost to you, according to the Cen-
ters for Medicare &
Medicaid Services.
Genetic tests and
cancer screenings
must be medically
necessary and or-
dered by your doctor
to be covered by
Medicare, according
to CMS.
Random genetic
testing and cancer
screenings aren’t cov-
ered by Medicare. If you’re interested in
such a test, you should speak with your
doctor.
Scammers still will try to bill Medi-
care for thousands of dollars – and
sometimes they get away with it. The
Office of Inspector General for the U.S.
Department for Health and Human Ser-
vices said a scammer may falsely state
that the patient suffers from a certain
condition to make it more likely that the
claim would be approved by Medicare.
Scammers know that every claim won’t
be approved; so they’re going to flood
the zone and aggressively submit as
many false claims as possible to make
some money.
If one of these fraudulent claims is
approved, it still can cause problems for
a senior who might want these tests
when their health picture changes,
Stokes said.
It’s possible that you could be denied
coverage later for tests or devices when
you genuinely need them. And it’s pos-
sible that beneficiaries could end up
stuck with a bill.

Crooks want your Medicare

number, too

Once the beneficiary’s information

is compromised, it can be used in other

unrelated fraud schemes and resold on

the black market multiple times.

“One of the highest-priced com-

modities is a Medicare number,”

Stokes said.

Remember, if your personal infor-

mation is compromised, it may be

used in other fraud schemes, accord-

ing to the U.S. Department of Health

and Human Services warning.

Sometimes, such as with Lyon,

nothing is ever sent. No testing infor-

mation ever arrives.

Sometimes, a genetic testing kit is

mailed to you after you sign up for

some service. But the department of

health warns that you shouldn’t accept

it unless it was ordered by your physi-

cian.

“Refuse the delivery or return it to

the sender. Keep a record of the send-

er’s name and the date you returned

the items.”

Other Medicare-related scams

The DNA scam is similar to one in

which con artists pretend to be from

the federal government, a diabetes as-

sociation, or Medicare and then prom-

ise “free” diabetic supplies, such as

glucose meters or diabetic test strips.

Or someone offers “free” medical

equipment, such as back braces, from

Medicare as part of a scam.

All you have to do, the fraudsters

say, is give your Medicare or financial

information. Don’t do that either. It’s a

scam.

In the past few years, some steps

have been taken to protect consumers

who have Medicare cards avoid ID

theft.

Last year, the Centers for Medicare

& Medicaid Services

began mailing new

Medicare cards. The

rollout – which was

to be completed in

April – involved all

58 million Medicare

beneficiaries.

The new ID on

the cards has a

blend of 11 letters

and numbers. The

new cards no longer

have your Social Security number on

them. But to allow for a transition peri-

od, doctors can accept the old cards

until Dec. 31.

As a result, some people might still

be using the old cards. And fraudsters

who ask for a card can hope that you

hand over one with a Social Security

number on it.

Consumers can call 800-633-

to report a scam or suspicious activity

to Medicare. If you are charged for a

genetic test that you didn’t receive or

otherwise believe is fraudulent, call

800-447-8477 for the U.S. Department

of Health and Human Services, Office

of the Inspector General.

Some tips to avoid Medicare-relat-

ed scams:

❚Never confirm or give out your So-

cial Security number to someone who

calls and claims to be from Medicare.

It’s a scam.

❚Make sure to shred your old Medi-

care card once you get the new one.

❚Make sure to monitor your Medi-

care Summary Notice.

DNA

Continued from Page 5A

Don’t accept a test kit unless it’s

from your doctor. GETTY IMAGES

employees have gotten overall better re-
sults. Many cases are pending, and even
when a settlement is reached, “The de-
fendants don’t always admit any wrong-
doing,” he noted.

Excessive fees are
a common complaint

Roughly a decade ago, inappropriate
investments were the primary problem,
driving nearly all of the lawsuits back in
2008, for example. Inappropriate in-
vestments include high concentrations
of an employer’s own stock within a
401(k) program. Workers who pack their
401(k) account with just one stock often
are lacking in diversification, meaning a
downturn for that company can drag
down a person’s portfolio.
“You generally don’t want more than
10% of your assets in a single invest-
ment, such as company stock,” said
George Fraser, managing director at Re-
tirement Benefits Group in Scottsdale.
Along with company stock, fewer
401(k) plans now feature industry-fo-
cused sector funds, which also often
lack diversification, he said.
But more recently, excessive or un-

reasonable fees paid by employees have

emerged as the dominant catalyst for

lawsuits. It’s not that 401(k) plans must

offer the lowest-cost investment

choices, but they must be reasonable

and subject to periodic review.

This includes the expenses charged

by mutual funds – the primary type of

investment vehicle in 401(k) plans – and

any program fees for record-keeping,

shareholder communication and other

administrative tasks.

Index, target-date funds

mitigate some concerns

Index funds have become more pop-

ular in 401(k) plans, partly as a way to

minimize the excessive-fee risk that

employers otherwise might face.

The spread of index funds is a big

reason 401(k) investors generally are

paying overall lower costs. Among stock

funds in 401(k) plans, average share-

holder-borne expenses declined from

an average $7.70 per $1,000 invested in

2000 to $4.10 last year, according to the

Investment Company Institute. Average

bond-fund expenses dropped from $

per $1,000 invested to $3.40 over that

span.

Index funds also tend not to blow up

from poor stock selection, which mini-

mizes the risk of lawsuits. Index funds

merely strive to match the performance

of a market barometer such as the Stan-

dard & Poor’s 500. They’re not trying to

beat the market by making big bets on

certain stocks or other assets that might

not pan out.

Many 401(k) plans now use target-

date funds as default options, for when

workers don’t select other choices in

which to invest. These funds, which

hold a mix of stocks and bonds suitable

for people at specific ages, typically fol-

low a low-cost indexing approach.

While lower fees are welcome, they

aren’t the only consideration.

“You can have the lowest-cost plan in

the world, but if only 40% of employees

participate or if they don’t have properly

allocated portfolios, it’s not working,”

Fraser said.

He cited automatic enrollment of

workers and regular portfolio review

sessions for workers as features that

can help boost participation.

Investors’ interests

must come first

A third driver of lawsuits is “self-

dealing” allegations.

Simply put, companies offering

401(k) plans, and the investment firms

they hire, are required to put the inter-

ests of workers above their own. They

owe a fiduciary obligation.

Self-dealing allegations arise when,

for example, investment managers offer

their own proprietary line of mutual

funds rather than unaffiliated choices,

of if they make other moves that smack

of a potential conflict of interest.

Alan Norris of Norris Wealth Man-

agement in Phoenix, said he still sees

poor-performing proprietary funds in-

side 401(k) plans. But too much employ-

er stock and other potentially unsuit-

able investments have become less

common, he added.

When providing a lineup of invest-

ment choices, and in other program de-

tails, employers and the financial com-

panies they hire must follow a “careful,

prudent process,” the Boston College re-

port noted.

The lack of a formalized process,

rather than poor results per se, often is

what gets employers in trouble.

The Boston College researchers said

they see a silver lining in the rising liti-

gation trend, as the threat of lawsuits

has helped make 401(k) programs bet-

ter, especially in terms of lowering fees

and weeding out inappropriate choices.

“Participants should make sure their

plans have low-cost investment options

available, such as index or target-date

funds,” said Sanzenbacher.

The flip side, he said, is that litigation

risk might be making employers less

willing to experiment with potentially

rewarding innovations.

Lawsuits

Continued from Page 5A