Mittwoch, Dezember 23, 2009

Further Data Points For The Trend XV...

Let's start with two aspects of the Harry Reid Health-Care bill that need to be understood to understand the problems that the Bill has.

First of all, while it appears to be legal, the corruption and bribery involved in getting enough votes to force cloture is breath-taking: seldom has the venality of at least some Senators (all of them Democrats, of course) been so blatantly apparent and, at the same time, have the bribes been taken so openly and without a shred of shame: $300 million "Louisiana Purchase" for Mary Landrieu, and $100 million for Chris Dodd's favorite Connecticut hospital, as well as Ben Nelson's super deal that gives an excellent example of beggar-thy-neighbor politics, including the surely to be infamous "My vote is not for sale" claim of Senator Nelson (need I say: a Democrat?) who then promptly turned around and sold his vote.

Of course, the Democrats think this is the way things ought to be: all fifty states should cut special deals.

...Iowa Democrat Tom Harkin replied that Mr. Nelson's Cornhusker kickback was merely an example all 50 states will soon follow. "Every Governor in the country is going to say, why doesn't our state" get that Medicaid deal, Mr. Harkin said, and the Nelson connivance is "going to be the impetus for" the federal government to pay 100% of the extra Medicaid costs for all the states.

Now, if everyone were to get in on the same kind of deal, it'd add an additional $30bn in costs to the health care spending plans, making absolute mockery of the already absurd notion that this won't add to the deficit.

But what Harkin is really saying as well is that the Democrats view this sort of beggar-thy-neighbor-and-what's-in-it-for-me mentality as normal, even desirable: they want all politicians, regardless of Democrat or Republican, to descend to the level of Chicago corruption politics, After all, it'd level the playing field.

I wish there was only one word to use to describe this open corruption and bribery. Disgusting doesn't quite describe it, puerile doesn't go quite far enough. I'll just have to push for the creation of a new epithet: Democrat.

Second, if you haven't been thoroughly off-put by the process of how this is apparently going to become law, then look at the content. I've mentioned this before: this bill wants to put insurance companies out of business and remove the profit motive from providing health care (guess that we'll then have the kind of care that places great value on the therapeutic effects of wanting to do the right thing, as opposed to actually doing the right thing).

Read this to understand the underlying problem:

In other words, the targeted health insurers would become de facto public utilities whose profits are gutted when the huge compliance costs under the Reid bill are piled on top of the hefty costs inherent in running a labor intensive health-care insurance business.

Worse still, the statutory rebate is only the tip of a larger regulatory iceberg that permeates the bill. Normally, insurers have the power to underwrite—to choose their line of business, to select and to price risks, and to decline unattractive risks. Not under the Reid bill. In its frantic effort to expand coverage to the uninsured, the bill will create state health-care exchanges supported by generous federal subsidies to unspecified millions of needy and low-income individuals. Any health insurance carrier that steers clear of these exchanges cannot keep its customers. Any insurance carrier that enters Mr. Reid's inferno will lose its financial shirt.

The Reid bill as it leaves the Senate calls for nothing less than to use the power of law to make it unprofitable to be a private insurance company (except, of course, in Nebraska, thanks to Senator Nelson). That's right, this bill aims at putting them out of business.

Initially, all insurers have to take all comers and to renew all policies except for nonpayment of premiums. Insurers are not allowed to take into account differential risks based on pre-existing conditions. And the premium differentials based on such matters as age and tobacco use are smaller than the market spreads. If too many customers demand coverage from a given insurer to insure efficiently, it's the government that will decide how many they have to keep and who they are.

Next, it's the government that requires extensive coverage including "ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse disorder services, prescription drugs, rehabilitative and habilitative [sic!] services and devices, laboratory services, preventive and wellness services and chronic disease management, pediatric services, including oral and vision care." The price squeeze gets even tighter because in every required area of care a collection of government standards will help set the minimum level of required services.

Ostensibly, the Reid bill does not impose any direct price controls on what health insurers can charge for this veritable cornucopia of services. But the bill's complex, cooperative federalism scheme authorizes state regulators, after recommendations from the federal government, to exclude insurers from the exchanges if their prices are too high, which would again be a competitive death knell. Exile from the exchange does not, however, restore traditional underwriting controls, as the Reid bill and other federal and state regulation continue to apply to these firms.

In other words, insurance companies are no longer allowed to require those taking larger risks to pay higher premiums, no longer allowed to decide what is covered, and may no longer decide what their prices are going to be.

If you own insurance stock now, SELL. Seriously: this destroys the basis for any private insurance company to survive, let alone have anything remotely near a return on capital that allows it to take on the risks of the business.

I sincerely doubt that the Reid Bill is even remotely constitutional, but that's something best left to the Supreme Court to decide.

On a broader front, read this.

While President Obama and his sincere disinterest in achieving any sort of success in Copenhagen certainly deserves the opprobrium he is receiving from the Left, the role of China in ensuring that Copenhagen was a farce appears to be on very solid ground.

China's strategy was simple: block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the west had failed the world's poor once again. And sure enough, the aid agencies, civil society movements and environmental groups all took the bait. The failure was "the inevitable result of rich countries refusing adequately and fairly to shoulder their overwhelming responsibility", said Christian Aid. "Rich countries have bullied developing nations," fumed Friends of the Earth International.

All very predictable, but the complete opposite of the truth. Even George Monbiot, writing in yesterday's Guardian, made the mistake of singly blaming Obama. But I saw Obama fighting desperately to salvage a deal, and the Chinese delegate saying "no", over and over again. Monbiot even approvingly quoted the Sudanese delegate Lumumba Di-Aping, who denounced the Copenhagen accord as "a suicide pact, an incineration pact, in order to maintain the economic dominance of a few countries".

Sudan behaves at the talks as a puppet of China; one of a number of countries that relieves the Chinese delegation of having to fight its battles in open sessions. It was a perfect stitch-up. China gutted the deal behind the scenes, and then left its proxies to savage it in public.

China gutted the deal behind the scenes and left its proxies to savage it in public.

I fear that too many understand nothing about the Chinese, even though it is quite simple: the Chinese government, which is run yb the Chinese communists, couldn't care less about what happens in Sudan or what happens to the Maldives except through one single vision: what does it matter to China.

China is nothing less than a completely straightforward and no-nonsense country, but one whose goal is nothing less than the betterment of China (or, more exactly, the betterment of the power position of the Communist Party in China). If it were not dependent on foreign trade, it would be heavily mercantile, and indeed the sort of import restrictions on finished consumer goods that China has in place is mercantile. China is interested in only one thing: China. The politicians in China are interested in only one thing: keeping power with the minimum of open repression and aggression, so as to minimize public criticism. Human rights are only of interest when the abuse becomes so obvious that it percolates down to the man on the street and endangers the hold the Communists have on the country. The government in China is riding a dragon: they dare not reign in the commerce that has boomed there, but they must also ensure that the newly rich (or even just the newly able-to-save middle class) do not get any whiff of the desire to hold political power. It will be an interesting ride, and the rider may well be eaten by the dragon.

To those who would blame Obama and rich countries in general, know this: it was China's representative who insisted that industrialised country targets, previously agreed as an 80% cut by 2050, be taken out of the deal. "Why can't we even mention our own targets?" demanded a furious Angela Merkel. Australia's prime minister, Kevin Rudd, was annoyed enough to bang his microphone. Brazil's representative too pointed out the illogicality of China's position. Why should rich countries not announce even this unilateral cut? The Chinese delegate said no, and I watched, aghast, as Merkel threw up her hands in despair and conceded the point. Now we know why – because China bet, correctly, that Obama would get the blame for the Copenhagen accord's lack of ambition.

China, backed at times by India, then proceeded to take out all the numbers that mattered. A 2020 peaking year in global emissions, essential to restrain temperatures to 2C, was removed and replaced by woolly language suggesting that emissions should peak "as soon as possible". The long-term target, of global 50% cuts by 2050, was also excised. No one else, perhaps with the exceptions of India and Saudi Arabia, wanted this to happen. I am certain that had the Chinese not been in the room, we would have left Copenhagen with a deal that had environmentalists popping champagne corks popping in every corner of the world.

China cannot afford such a deal: their only chance for long-term growth is to exploit their coal reserves to generate enough electricity that they can then afford to build enough nuclear plants (be they uranium-power fission or thorium plants) to ensure long-term energy independence.

Of course, the fact that environmentalists failed to impose their will upon the industry of the world is something for which we should actually be grateful to the Chinese. Seriously.

As Mark Lynas, author of the article linked to above, points out: China didn't need the deal. If anything, the collapse of the talks, the farce that is Copenhagen, is exactly what China wanted (and got):

So how did China manage to pull off this coup? First, it was in an extremely strong negotiating position. China didn't need a deal. As one developing country foreign minister said to me: "The Athenians had nothing to offer to the Spartans." On the other hand, western leaders in particular – but also presidents Lula of Brazil, Zuma of South Africa, Calderón of Mexico and many others – were desperate for a positive outcome. Obama needed a strong deal perhaps more than anyone. The US had confirmed the offer of $100bn to developing countries for adaptation, put serious cuts on the table for the first time (17% below 2005 levels by 2020), and was obviously prepared to up its offer.

The fact that Obama was unable to impose his will is fundamental: the Chinese know that Obama is, at best, a very weak President, one beholden to silly domestic issues and pressure groups, someone who is, additionally, way in over his head and barely able to tread the water of international politics. The Iranians know this, the Chinese know this, the Europeans are slowly figuring this one out (they'll get there, eventually, driven by an increasingly weak Dollar) and this weakness will become more and more apparent to the chattering sycophants in the newsrooms, cloaked in discussions about multi-polarity and American re-orientation.

Copenhagen was much worse than just another bad deal, because it illustrated a profound shift in global geopolitics. This is fast becoming China's century, yet its leadership has displayed that multilateral environmental governance is not only not a priority, but is viewed as a hindrance to the new superpower's freedom of action.

Well, duh: the touchy-feely-we're all part of Gaia silliness that dominates "green" politics - as well as the complete and utter inanity of placing all of their eggs in a basket placed on the big "X" marked with the sign "China will sit down right here" - is naive at best and reprehensible given their own (misplaced) concerns that the issues facing "all of humanity" are so dire that we must impoverish the emerging countries of the world in order to ensure our (First World) hegemony for the important issues.

Those who place a future state of the environment higher than the current state of their fellow human beings should not wonder when those whose lives are ones of desperation and deprivation decide that the future can go fuck itself, we want to eat. 

And get one of those iPods while we're at it.

As long as the environmentalists fail to understand that their policies mean that a huge swath of humanity must necessarily continue to live in poverty and must be denied any sort of growth that allows them to leave lives that are not dominated by desperation driven by hunger and avoidable death due to deprivation so that the West can feel good about itself (or, more exactly, that the "Gutmenschen" or "good people" of the West cease being tormented by world inequality, as they can justify it because it is saving the world (barf)), they are doomed to fail.

You can't ask someone to volunteer to continue to be poor and to die early because their aspirations for a better life mean that they will consume more (and live longer). To believe that this works is an act of sheer and utter stupidity.

Of course, that's pretty much par for the environmentalists.

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