Belmont Club

Mohammed Versus the Mountain

The first quarter of 2014 is shaping up like this: the Obama administration is going entirely on the defensive. It’s domestic goal will be to stave off the emerging counterproposals to Obamacare, which is clearly in trouble. Internationally the administration will try to save its Iran nuclear nonproliferation deal, together with its linked handmaiden, the Syria policy.

The threat to Obamacare is on two fronts. The first are moves to prohibit “bailouts” to insurance companies. These bailouts will come in two forms: the “risk corridors” through which the government will reimburse losses to companies incurred in the course of participation and the reinsurance through which the administration picks up policies which go bad.

The second challenge to Obamacare are emerging alternatives such as the Coburn-Burr-Hatch plan, also known as the CARE act. It would replace Obamacare with a system of health vouchers to invididuals and block grants to the states to handle Medicaid. Individuals who receive these means tested vouchers can either buy insurance with it or receive a default-selected policy of equivalent worth. The block-grant aspect of CARE is interesting because it opens the possibility that together with the vouchers, individual states can design their own programs ranging from single payer systems to much more free market systems. This fits in nicely with the Health Care Compact framework proposed by Leo Linbeck, which has now been enacted in several states and envisions precisely that kind of freedom of choice.

Obamacare is failing. Health insurance companies say that up to 20% of Obamacare premiums remain unpaid, despite as many as 10 attempts to collect them. It has adversely selected the old and infirm into its ranks. Some insurance companies have already estimated their reinsurance claims in preparation for filing them.  The entire billing and payments system remains a shambles. The Washington Post reports that tens of thousands of mistakenly filled applications are sitting in a computer with no way to correct them.  “For now, the appeals are sitting, untouched, inside a government computer. And an unknown number of consumers who are trying to get help through less formal means — by calling the health-care marketplace directly — are told that HealthCare.gov’s computer system is not yet allowing federal workers to go into enrollment records and change them, according to individuals inside and outside the government who are familiar with the situation.”

Obamacare’s advocates are now resorting to arguing that taxpayer payouts to insurance companies are not bailouts. Yual Levin at the National Review, for examples, refutes through Washington Post’s assertion by Sarah Kliff that there is technical difference between something called a bailout and an equivalent payment that is not called a bailout.

And when it fails there will be a outcry for a fix.  The Coburn-Burr-Hatch plan’s best bet is to watch the edifice collapse and step forward with a replacement. Perhaps the most indicative talking point is the one floated by Taegan Goddard of Roll Call inoculating the public against this very possibility. He quotes sources who say that while Obamacare is a real stinker it’s too late to go back now.

“All consumers would take a huge financial hit, because health care costs would continue to rise, and insurers would probably recoup their losses by charging higher premiums.”

“The insurers have invested a lot in the law, and if they lose money through repeal, it could cause everyone else’s premiums to go up, Alan Cohen, chief strategy officer for Liazon, said. …

Kaiser Health News: “Some influential conservatives [and groups, including the U.S. Chamber of Commerce,] are now saying the health care law is too entrenched to repeal.”

There’s no alternative but to ride ‘er down to Davy Jones because it’s too late now. Too late for everything. Basically the argument is that Obamacare is the Hotel California. “You can check out any time you like, but you can never leave.”

On the international front the administration will try and deal with the dual collapse of the Iranian and Syrian situations. The Daily Beast quotes two senators quoting John Kerry’s off the record admission that his Syria policy is failing.

Kerry also said he believes the regime of Bashar al Assad is failing to uphold its promise to give up its chemical weapons according to schedule; that the Russians are not being helpful in solving the Syrian civil war; and that the Geneva 2 peace talks that he helped organize are not succeeding. But according to the senators, Kerry now wants to arm Syria’s rebels—in part, to block the local al Qaeda affiliates who have designs on attacking the U.S. (Kerry’s spokesperson denied that he raised the issue of supplying weapons, but did not dispute the overall tenor of the conversation.)

“[Kerry] acknowledged that the chemical weapons [plan] is being slow rolled, the Russians continue to supply arms, we are at a point now where we are going to have to change our strategy,” said Sen. Lindsey Graham, who attended Kerry’s briefing with lawmakers on the sidelines of the Munich Security Conference. “He openly talked about supporting arming the rebels. He openly talked about forming a coalition against al Qaeda because it’s a direct threat.”

The much-ballyhooed Syria peace conference collapsed in a heap of ruins. Lakhdar Brahimi of the UN admitted that absolutely no progress took place. “We thought that if we first addressed some of the humanitarian issues perhaps we could achieve something there, but we didn’t,” he said.

And as for Iran, Obama is about to be stampeded by his NATO partners, hungry for business and eager to do deals with Tehran. The French foreign minister said Paris would have “significant commercial opportunities” in Iran if sanctions are lifted, according to Reuters. The Germans were even more forthright. Foreign Policy says “sanctions relief has corporations in Berlin salivating at the chance to make money in the Islamic Republic.”

Rather pathetically Secretaries Kerry and Hagel held a press conference in Munich to plead for a “transatlantic rennaissance”.

MUNICH — In an unusual joint appearance overseas, Secretary of State John F. Kerry and Defense Secretary Chuck Hagel told European allies Saturday that Washington would depend more heavily on them to tackle a litany of political and security crises, even as the two pushed back against concerns that the Obama administration was abdicating leadership on the same issues. …

The Americans encountered some concern, however, that the Obama administration was retreating from Washington’s traditional leadership role in security matters, citing its unwillingness to become directly involved in the civil war in Syria or the popular uprising in Ukraine.

If Obama thinks he can restart the sanctions when the Iranians cheat on him he has got another thing coming. The administration is finally coming to the realization that the glory days of “fundamentally transforming America”, of rolling victoriously across the steppe runnng down Republicans in its path are over.  The consequences of its errors are now hemming it in on every side. The goal is now to survive.

It has now been announced that President Obama is going to Saudi Arabia to mend fences with the Kingdom. The Washington Post says “the White House announced Monday that President Obama will travel next month to Saudi Arabia, where he will hear from an ally anxious about developments that have transformed the Middle East and strained the kingdom’s relations with the United States. … The relationship has since deteriorated further over the issue of Syria’s civil war, in which Saudi Arabia is arming rebel groups seeking President Bashar al-Assad’s overthrow, and over Iran’s nuclear program.”

The administration is playing defense both domestically and internationally. The best Obama can now hope for is that no serious catastrophes — other than those already foreseen — occur in 2014. It is quite a comedown from 2008, when he talked about a time when the seas would begin to fall from the power of his climate change policies.

The Saudi trip recalls Francis Bacon’s bon mot: “Mahomet made the people believe that he would call a hill to him, and from the top of it offer up his prayers, for the observers of his law. The people assembled; Mahomet called the hill to come to him, again and again; and when the hill stood still, he was never a whit abashed, but said, If the hill will not come to Mahomet, Mahomet will go to the hill.”


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