Mellody's Math: How the President's Budget Affects You

On Monday, President Bush proposed a $2.57 trillion budget for 2006. Here are the areas that could affect you the most:

Education

Whereas the first term appeared to be about grade school, this budget has a big focus on high school and college. The emphasis is on the basics of reading, writing and arithmetic, with the frills being eliminated.

What's being added:

$200 million for high school students who read below grade level -- this represents an eight-fold increase in the current $25 million budget.

45 percent increase (up to $18 billion) for Pell grants (which help more poor students go to college).

What's being cut:

All federal spending on vocational education -- $1.2 billion.

$440 million from Safe and Drug-Free School grants -- interestingly the "Just Say No" campaign was developed by the Reagan/Bush administration.

Health Care

While there are no big changes for Medicare and Medicaid, lower-income families will get a break on the cost of health care while veterans will be asked to pay more.

Status quo:

Both Medicare and Medicaid will see no significant increases from what is required by law. Specifically, existing law sets spending for Medicare at $340 billion, a 17 percent increase, which primarily covers the prescription drug benefit. Medicaid is set by law to increase 2.2 percent to $198 billion.

The good news:

Health insurance refund for low-income families who must purchase their own health insurance -- this refundable income tax credit would cover as much as 90 percent of the cost, according to the Treasury Department.

Tax breaks to encourage wider use of health savings accounts.

The bad news:

Veterans are being asked to pay more for health care. Specifically, veterans who have the highest incomes among those seeking VA health care and who do not have service-connected illnesses or injuries are going to be asked to pay a $250 annual fee (think of this like a premium). Additionally, there will be an increase in prescription drug co-payments for such veterans from $7 to $15 for a 30-day drug supply -- this adds up to almost a $100 difference for the cost of one prescription over the course of a year. More than 2 million veterans could be affected.