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Obamacare has made the debt crisis worse

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Third in a five-part series.
Part one: Philip Klein: The welfare state is destroying America

Part two: Conn Carroll: Europe: the canary in the welfare-state coal mine
Part three: Philip Klein: Obamacare has made the debt crisis worse
Part four: David Freddoso: How the left got Americans hooked on welfare
Part five: Conn Carroll: Ending the welfare state

Days after signing the $787 billion economic stimulus package into law in February 2009, President Obama hosted a fiscal responsibility summit at the White House.

It was at the event that then-budget director Peter Orszag declared: "Health care reform is entitlement reform."

Orszag was correct that controlling health care costs must be central to any effort to rein in entitlements, but the problem is that the legislation that Obama ended up signing 13 months later made the problem far worse.

By 2019, according to the chief actuary of the Centers for Medicare & Medicaid Services, health care spending will gobble up a staggering 21 percent of the economic output of the United States -- a number that's higher than projections before the health care law passed, which Obama himself had declared "unsustainable."

Defenders of the national health care law often tout the fact that the Congressional Budget Office determined it would reduce the deficit over 10 years. But this includes numerous accounting gimmicks -- one of which has already been exposed as a farce by the Obama administration itself.

The CLASS Act is a long-term care program within Obamacare. Because it was slated to collect five years of premiums before doling out any benefits, the CBO determined it would reduce the deficit by $70 billion over 10 years -- or about half of the deficit reduction Democrats claimed from the health care law.

But in October 2011, the Obama administration abandoned the program after detailed studies proved what most observers were saying all along -- that it was unworkable as designed. Thus, they won't enjoy any of the short-term deficit reduction that the program produced on paper.

Otherwise, Democrats mostly depended on a combination of Medicare cuts and tax increases to offset the costs of Obamacare. But both CBO and CMS have expressed doubts that the Medicare cuts will ever actually go into effect, because historically, Congress has over-ridden such changes to the program when it comes time to make them.

CMS went on to note that the claimed savings "may be unrealistic" because, if the proposed cuts to payments to hospitals, nursing facilities and home health agencies go into effect, "roughly 15 percent of [Medicare hospital insurance] providers would become unprofitable within the 10-year projection period ..."

After protests by the unions, Obama agreed to delay until 2018 a provision to raise taxes on high value health insurance plans -- but that, too, may not go into effect.

Ultimately, though, the reason why Obamacare will make our fiscal crisis worse is simply that it drastically increases spending. The new Obama subsidies for individuals to buy insurance on the government insurance exchanges and add 17 million people to the Medicaid rolls is now projected to cost $1.4 trillion from 2012 through 2021 alone, which doesn't even take into account full implementation.

So even if the combination of tax hikes and Medicare cuts go into effect, the money raised will be used to pay for this new entitlement rather than deficit reduction.

This isn't a theoretical argument. Back during the 2008 presidential campaign, Obama proposed raising the payroll tax on higher income earners to help extend the solvency of Social Security.

Yet he passed a similar tax to help raise money for the health care legislation. As passed, the law will hike the payroll tax by .9 percent on income over $200,000 and impose an additional 3.8 percent capital gains tax on top of it.

Now that his tax idea was absorbed by the health care law, Obama has no plan to stabilize the program's finances as baby boomer's are starting to retire.

Instead of calming the rapidly spreading entitlement fire, Obamacare doused it with gasoline.

Philip Klein is senior editorial writer for The Examiner. He can be reached at pklein@washingtonexaminer.com.

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