Sunday, August 26, 2012

Citation Ten makes Cessna fastest once again

Cessna Aircraft Corporation announced this week that its new Citation Ten will be the world’s fastest civil aircraft. After the retirement of the Concorde, Cessna’s Citation X was the fastest civil airplane with a maximum Mach number of 0.92 until Gulfstream unveiled its new G650 business jet. The G650 boasted a maximum Mach of 0.925. In an August 24 press release, Cessna revealed that the new Citation Ten will have a maximum Mach of 0.935.

A speed of Mach 0.935 means that the Citation Ten will be capable of traveling at 93.5 percent of the speed of sound. This is equivalent to almost 700 miles per hour (1,126 kilometers per hour).

Scott Ernest, Cessna President and CEO, said, “As our founder Clyde Cessna said, ‘speed is the only reason for flying,’ so at Cessna we design, engineer, manufacture and fly the fastest civil aircraft in the world – not for us, but for our customers so they can work faster, more efficiently and get the job done.”

Cessna also notes that in addition to an increase in speed over the old Citation X, the new Ten will also have increased payload capacity and range. The Ten will have a range of 3,245 nautical miles (3,734 statute miles or 6,009 kilometers), an increase of almost 200 miles over the X. Payload is also slated to increase by about 200 pounds (90 kilograms).

As a part of the celebration surrounding Cessna’s return to preeminence among fast jets, the company also announced that it will have a presence on all four race cars that are part of the Chip Ganassi Racing Team. Ganassi Racing operates a Citation X according to Professional Pilot magazine.

In the press release, Ganassi says, “My teams compete in nearly 70 races a year and I try to make it to as many as I can.” He continues, “The races might be on the same weekend and sometimes even on the same day and thousands of miles apart. So like any business owner, time is one of my most valuable assets. This airplane shrinks the map for me and has become a vital piece of my business allowing me to spend more time at the track and with my teams. You couldn’t put a value on how important it is to my business.”

The Citation Ten is currently undergoing flight testing and certification. It first flew in January 2012 at Cessna’s factory in Wichita, Kan. According to Cessna, first deliveries of the Ten are scheduled for January 2013.

Disclosure:  The author is employed as a pilot by a division of Cessna and Textron.

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Friday, August 17, 2012

Obamacare facts: Death panels and rationing

The phrase “death panel” is a politically charged term that originated with Sarah Palin in 2009. Palin coined the term in reference to the Affordable Care Act’s requirement that Medicare pay for end-of-life counseling sessions. Her original Facebook post on the subject read, “The America I know and love is not one in which my parents or my baby with Down Syndrome will have to stand in front of Obama’s ‘death panel’ so his bureaucrats can decide, based on a subjective judgment of their ‘level of productivity in society,’ whether they are worthy of health care.” called “death panels” one of 2009’s “whopper[s] of the year.”

The ACA does not contain the phrase “death panel” and the end-of-life counseling cited by Palin was not mandatory. This does mean that Palin was totally off the mark however.

The ACA does establish an unelected board of bureaucrats who will be tasked with cutting Medicare spending. According to a description of the Independent Payments Advisory Board (IPAB) in the New England Journal of Medicine, the board will consist of 18 appointed members (including three from the Department of Health and Human Services) and will be required to submit proposals to reduce per capita Medicare spending in years in which spending is projected to exceed target rates.

The NEJM notes that the IPAB is prohibited from rationing care, increasing copayments, restricting benefits or modifying eligibility criteria. One of its few options is the ability to cut payments to doctors and, after 2020, specific providers such as hospitals and hospices. Overriding the IPAB’s recommended payment cuts would require a three-fifths vote of the senate. This means that stopping the IPAB’s cuts would be very difficult and most likely require a bipartisan effort.

The NEJM also points out that currently the IPAB’s recommendations for payment cuts for transactions through private health insurance are not binding. These price controls on private medical transactions would have to be approved by Congress, which, the NEJM says, “may not be able to cap Medicare expenditures without addressing private expenditures as well.” This points to price controls for private medical costs as a means of controlling Medicare’s runaway costs.

A consequence of price controls is fewer available doctors. If providers cannot charge a market price, the supply of providers will decrease. This is already happening in Medicaid. The Wall Street Journal reports that 31 percent of doctors already do not accept new Medicaid patients because the entitlement pays them at a lower rate than private health insurance companies.

Price controls are effectively a form of health care rationing. As price controls cause shortages, allotting the available care will fall increasingly fall upon government bureaucrats.

Rationing is the inevitable outcome of price controls and shortages. Donald Berwick, the administrator of the Centers for Medicare and Medicaid Services, said in an Associated Press interview, “The decision is not whether or not we will ration care. The decision is whether we will ration with our eyes open. And right now, we are doing it blindly.” President Obama appointed Berwick during a senate recess to avoid confirmation hearings.

Other countries with government administered health care have followed the price control and rationing model. Canada’s universal health care system has led to long wait times “for practically any procedure or diagnostic test or specialist consultation in the public system” according to the Wall Street Journal. In Canada, only half of ER patients are treated “in a timely manner by national and international standards.” Perhaps this is why the premier of the Canadian province of Newfoundland came to the United States in 2010 when he had to have heart surgery instead of going to a Canadian hospital. In fact, many emergency patients in border areas are sent to U.S. hospitals for treatment.

In England, the Daily Mail reported in 2008 that a government edict to treat patients within four hours of check-in had led hospitals to keep patients in ambulances for up to five hours before being allowed access to the emergency room. The four hour wait as measured by the government did not begin until the patients left the ambulance and entered the hospital. Over 45,000 patients waited more than one hour for access to the emergency room. Leaving patients in ambulances also means that the ambulances are not available for new calls.

In 2011, the Independent reported that budget cuts were forcing the British National Health Service to overtly ration health care. Two-thirds of the national health trusts in the U.K. are rationing treatments for “non-urgent” procedures. Examples of rationing include only allowing hip and knee replacements for patients in severe pain, delaying cataract surgery until the patient’s sight is substantially affected, requiring seven cases of tonsillitis within a year before allowing children to have a tonsillectomy, and mandating “exceptional circumstances” and six months of monitoring before inserting “grommets” in a child’s ears to improve hearing.

These economic laws hold true even in the United States. In Massachusetts, which has been cited as the prototype for Obamacare, the Boston Globe reported in November 2011 that tiered health plans with limited networks that force consumers to endure long wait times or pay more out-of-pocket to be treated sooner are becoming more common in the state. An analysis by the Cato Institute found that since Massachusetts enacted health care reform wait times have increased. Wait times for a doctor’s appointment in Boston, already longer than other metropolitan areas before the reform, have increased while they have improved in other cities. Health care costs in Massachusetts have increased faster than the national average and adverse selection, the sickest people choosing the best insurance plans, has led some insurers and employers to stop offering the most comprehensive plans.

Earlier this month, Massachusetts Governor Deval Patrick signed a health care price control bill into law. The New York Times reports that the new law will cap both public and private health care spending “so that it will grow no faster than the state economy.” The law sets up a commission to monitor increases in spending. The commission can demand an explanation from providers or insurers whose costs exceed the target rate. It can also fine organizations up to $500,000 if it finds that they did not make a good faith effort to reduce costs.

A 2009 Rasmussen poll indicated that only 32 percent believed that Massachusetts health care reform was a success. A more recent WBUR poll found that 78 percent still consider health care costs a significant problem for Massachusetts. Sixty-three percent say that costs have gotten worse over the past five years since the reform was enacted.

The discussion of quality adjusted life years brings the discussion of rationing full circle back to Palin’s original quote. Quality adjusted life years (QALYs) is a calculation that measures “the benefits gained from a variety of medical procedures in terms of quality and life and survival for the patient” according to Oxford University’s Bandolier Journal.

While the ACA currently forbids the use of QALYs “to determine coverage, reimbursement, or incentive programs,” an article in the New England Journal of Medicine is openly critical about the law’s prohibition, saying that the “notion that the country can avoid the difficult trade-offs that cost-utility analysis helps to illuminate” is “magical thinking.” If the law were amended to allow the use of QALYs, it might mean that older patients would be unable to receive certain surgeries because the procedure offered more benefit to younger people. It might also mean that babies like Trig Palin would be passed over for people in a more productive stage of life.

As the demand for health care increases due to more people being covered with health insurance, there are certain to be shortages since the supply of doctors and hospitals is not increasing. Rationing and shortages in such situations commonly take the form of long wait times for treatment and price controls. This has occurred in a multitude of other countries where government-controlled health care has been tried. Given the shoddy, backroom manner in which the ACA was written, it is unlikely to contain any new and different approaches that will work where previous government health care bureaucracies failed.

President Obama and the Democrats may have been able to pass the Affordable Care Act and get it past the Supreme Court. As yet, they have been unable to repeal the laws of economics.

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Tuesday, August 14, 2012

Black voters look beyond Obama

Recently my wife and I were eating an Atlanta-area fast food restaurant when my wife struck up a conversation with a black lady sitting next to us. As the conversation turned to politics, I braced myself, assuming the woman to be an Obama supporter. However, as she spoke, my admittedly stereotypical view was shattered.

The woman, who I’ll call Julia, was very disenchanted with current state of the economy. She told us how she was a teacher with advanced degrees in mathematics. Because of cutbacks in the school systems, she was unable to find a suitable job and was working as a preschool teacher for small children, a job that she clearly disliked.

Economic data tells us that there are likely many more Julias out there. According to the Bureau of Labor Statistics report for August, the national unemployment rate remained steady at 8.3 percent. The unemployment rate for blacks was significantly higher at 14.1 percent. According to historical data from the Labor Center at UC Berkeley , black unemployment has chronically been significantly higher than the nation as a whole or other ethnic groups.

The Center for Responsible Lending found that black homeowners were disproportionately affected by the foreclosure crisis. Black and Latino homeowners were more likely to be at risk of foreclosure than other whites. Among recent borrowers, blacks and Hispanics were almost twice as likely as non-Hispanic whites to lose their homes.

Additionally, President Obama disappointed many black leaders with his declaration of support for same-sex marriage several months ago. According to a Pew Poll, only 36 percent of black voters approve of same-sex marriage. The Coalition of African-American Pastors, a nonpartisan group, recently launched an online petition drive supporting traditional marriage.

“The hijacking of the civil rights movement by homosexuals, bisexuals and gender-confused people must and will stop,” Rev. William Owens, the group’s founder, said in a joint press release. “We will stand in our pulpits, stand in the streets, stand in the chambers of policymaking and stand at the ballot box for those who are for God’s design of marriage and family.”

Some black voters might also be disappointed with the president’s snub of the NAACP at this year’s convention. Mitt Romney addressed the conventioneers in a speech that drew both boos and cheers. President Obama, however, did not attend the convention, appearing only in a brief video message. Vice President Joe Biden did speak at the convention.

Black voters still overwhelmingly approve of President Obama’s job performance. Gallup recently polled 85 percent support for the president among blacks. Nevertheless, even though Obama’s support among blacks is still significant, it marks a large drop since 2008 when the Obama won 95 percent of the black vote according to CNN exit polls. A 10 percent decline could make the difference in swing states, especially those with large populations of black voters.

In Georgia, the loss of black support has been even more dramatic. CNN reports that 98 percent of Georgia’s black voters cast their ballot for Obama in 2008. A July poll from Insider Advantage shows the president with only 76 percent of the black vote. Tellingly, only six percent favored Romney while almost 18 percent remained undecided.

In one of the most recent state polls, an August 12 Survey USA poll of 585 likely voters in Missouri, 85 percent of black voters indicated that they will vote for President Obama. According to CNN, Obama won 93 percent of black voters in Missouri in 2008. At eight percent, Mitt Romney’s share of black voters was almost identical to John McCain’s seven percent. The remaining seven percent of black voters are undecided.

In the Missouri poll, Romney wins 45 percent of all voters to Barack Obama’s 44 percent. Five percent are undecided. This illustrates how even a small movement of black voters away from the president can cause a battleground state to swing toward Romney. This is true even if they simply stay away from the polls and don’t vote for either candidate.

Like many other black voters, Julia, while disenchanted with Barack Obama, is not completely sold on Mitt Romney. However, for what may be the first time in many years, large numbers of black voters are open to an appeal from Republican candidates. President Obama’s economic policies have not helped black voters find jobs or keep their homes. If Republicans continue to reach out to minorities and point to the growing number of black Republican candidates and elected officials such as Allen West and Artur Davis, the minority flight from the Democratic Party may increase.

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Friday, August 3, 2012

Obamacare facts: Reform is not ‘deficit neutral’

President Obama and the Democrats attempted to sell Obamacare to the American people by claiming that we could not afford not to pass the bill. President Obama is quoted by Politifact as saying that, “According to the Congressional Budget Office -– the independent organization that both parties have cited as the official scorekeeper for Congress –- our approach would bring down the deficit by as much as $1 trillion over the next two decades." The undated Politifact piece rates the promise as half-true, which is being generous.

A recent New York Times article makes a similar claim. The article notes that, according to the Congressional Budget Office, repeal of Obamacare would add $109 billion to budget deficits over the next 10 years. Logically, that does not make sense. How is it that the federal government can enact a massive new entitlement, create scores of new bureaucracies, add insurance coverage for millions of people, and still save money on the deal?

The answer can also be found in the Times article. “Specifically,” the article notes of the CBO report, “it said repeal of the law would reduce spending by $890 billion and reduces revenues by $1 trillion in the years 2013 to 2022.” The secret to how President Obama and the Democrats could claim that the Affordable Care Act was “deficit neutral” is that they built more tax increases than spending into the law. Both taxes and spending increase under Obamacare by about a trillion dollars each.

The individual mandate tax/fine is probably the most well known tax in Obamacare, but it is far from the only tax increase. Americans for Tax Reform has put together a comprehensive list of tax increases found in the Affordable Care Act. The long list includes higher withholding from pay checks for Medicare and restrictions on the use of Flexible Spending Accounts and Health Savings Accounts. It also raises the income requirement to deduct medical expenses from 7.5 percent of adjusted gross income to 10 percent. There are new taxes on charitable hospitals, medical device manufacturers and even indoor tanning salons. One of the most insidious taxes is a new cap on Flexible Spending Accounts that will hit families of special needs children especially hard. The full list of tax increases can be viewed on the ATR website.

The new taxes listed do not include increased state taxes, but states that choose to participate in the Medicaid expansion will have to look for new sources of revenue. As Medicaid requirements are liberalized, more people will flock to Medicare. The federal government will pay a portion of these costs, but the state will be responsible for at least 10 percent. Most state governments are already short of cash. Paying for Medicare benefits for millions of new enrollees will require spending cuts, borrowing, tax increases, or some combination of the three.

Two other factors further skew Obama’s claim. Government programs are almost universally more expensive than their original estimates. According to the Wall Street Journal, this has been true for government health care in the past. Since the introduction of Medicare and Medicaid in 1965, medical costs have increased more than twice as much as inflation in the general economy.

Similarly, tax increases almost always produce less revenue than estimated. This is because people and companies act to avoid taxes. A classic example is the luxury tax on yachts enacted in 1990. The intention was to make the rich pay their fair share by levying a 10 percent tax on yachts. In reality, the tax was a disappointment. According to the New York Times, its main result was to almost destroy the U.S. pleasure boat industry and cause thousands of workers at boat companies to lose their jobs.

If income is taxed, people defer it or take other benefits. If tanning salons are taxed, people won’t tan as much. If medical device manufacturers are taxed, they will likely sell fewer devices. If hospitals are taxed, less money will be spent on their patients. The common denominator is that taxes mean that there is less of the activity or thing that is taxed.

Obamacare promises the American people that they will get something for nothing. In reality, the services promised by Obamacare are not free or even low cost. Their cost is simply hidden in unseen taxes on other products and services. Obamacare’s continuing unpopularity means that most Americans understand the fundamental economic truth that “There ain’t no such thing as a free lunch.”

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Thursday, August 2, 2012

More legal trouble for Obamacare

President Obama has suffered another setback in court. A federal judge in Colorado recently ruled that the Department of Health and Human Services mandate that all insurance policies cover contraceptive and abortifacient drugs placed an illegal burden on freedom of religion.

Judge John Kane’s ruling was narrow, currently applying only to Hercules Industries according to Talking Points Memo. The company filed suit against the mandate claiming that it violated the Catholic beliefs of its owner. Judge Kane agreed and granted an injunction that prevented enforcement of the mandate against Hercules until courts could rule on the merits of the case. Judge Kane was an appointee of Democratic President Jimmy Carter.

There are also other lawsuits challenging the mandate that could benefit from the precedent set by Kane’s ruling. According to the Catholic News Agency, at least 43 Catholic groups have filed suit against the HHS mandate. Atlanta Archbishop Wilton Gregory told the Georgia Bulletin that Georgia dioceses are not a part of the litigation, but are working to support it. He called on Catholics to “pray for its success and support the initiatives that are intended to protect our religious freedom.”

Judge Kane based his ruling on the Religious Freedom Restoration Act of 1993. This law requires that any “substantial burden” placed on religious beliefs having a “compelling government interest” and be the “least restrictive means” of advancing that interest. Judge Kane found that the HHS contraceptive mandate placed a “substantial burden” on Hercules’ First Amendment right to the free exercise of religion.

The Hercules case will not provide a silver bullet to slay Obamacare. A court may rule that the HHS mandate is illegal, but it is unlikely to throw out the entire law. A Supreme Court ruling in June established the constitutionality of the law by granting Congress an immense new taxing power.

Kane’s injunction does set the stage for a landmark ruling on freedom of religion, however. If a court subsequently rules in favor of Hercules it could strike down the mandate entirely. Either way, the ruling is likely to be appealed by the losing party and could eventually find its way to the Supreme Court.

In the end, the election may render the challenges against the mandate moot. If Mitt Romney becomes president, he has stated that his first act would be to issue an Executive Order that would stop the implementation of Obamacare. If Republicans win control of the senate, a repeal of Obamacare would be certain to pass both houses of congress.

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