Obama's Budget Cuts Make Smoking Habit More Costly

SUMMIT, NJ - JUNE 22: Matilde Hoffman smokes a cigarette with friends after getting off the train June 22, 2012 in Summit, New Jersey.Matilda graduated from University of Southern California in December of 2011 with a bachelors degree in neuroscience. Since graduating she has applied to over 30 different jobs, gone on 3 interviews, and had no luck finding a full time job. In the meantime she has been working two part time hostess jobs and volunteering with New York Cares. In June, on a whim, she applied to a one year medical science program at Drexel University at was recently accepted. ''I was tired of the job search. All this looking for a job, volunteering and shuffling around to two part time jobs was getting stressful. If that's the only opportunity I have, if nothing else comes my way, I should do it. If this is what life has brought to me at the moment I should take it.'' she said. From 2000 to 2010 the number of waiters and waitresses ages 18 to 30 with college degrees increased 81 percent according to the U.S. Census Bureau. Educated bartenders, dishwashers in that age group doubled. Recently the Associated Press reported that ''About 1.5 million, or 53.6 percent, of bachelor's degree-holders under the age of 25 last year were jobless or underemployed, the highest share in at least 11 years.'' (Photo by Allison Joyce/Getty Images) (Getty)

Unveiled in a flurry of numbers and details, President Barack Obama's health care provisions of the 2014 spending plan will touch every American family, and businesses large small throughout the economy.

Announced on Wednesday, the budget for the Health and Human Services department would rise 5.4 percent to more than $949 billion, roughly one-fourth of all federal spending.

While the Medicare cuts are likely to get the most political heat, the biggest health consequences from Obama's plan could come from nearly doubling the federal tobacco tax.

If enacted by Congress, it could make young people think twice about picking up the cigarette habit. About one in five adults is a smoker in the U.S., a rate that seems stuck despite ceaseless anti-tobacco campaigns. Obama would nearly double the federal tax on cigarettes to $1.95 per back. And many think that could deter young people from smoking.

On the more heated issue of Medicare, the president sought to tap the fiscal brakes. His plan offered about $400 billion over 10 years in cuts, part of a bid to draw Republicans into negotiations to reduce government debt. Against long run trends, it amounted to single-digit percentage points trimmed from Medicare, but for seniors individually and for businesses like hospitals and drug companies, the consequences could be substantial.

Upper-middle class and well-to-do seniors would pay higher monthly premiums for outpatient and prescription drug coverage, in a significant expansion of a policy already in effect. The current premiums would be boosted, and the share of beneficiaries exposed to the higher rates would keep growing until it reaches one-fourth of all those in the program. Now, only about 6 percent of Medicare recipients pay higher "income related" premiums.

Newly joining Medicare beneficiaries would face several charges that will not apply to established retirees. These include a $100 copayment for home health services not preceded by an in-patient stay.

But most of the Medicare cuts would fall on service providers such as hospitals and nursing homes. Drug companies would bear the biggest hit, more than $130 billion over 10 years, through rebates and discounts that include a new proposal for speeding the closure of Medicare's prescription drug coverage gap.

Spending on Medicaid, the program for low-income and severely disabled people, would rise significantly as the coverage expansion in Obama's health care law goes into full effect next year. Medicaid is expected to account for about half the nearly 30 million uninsured people eventually gaining coverage through the Affordable Care Act.

The costs of the coverage expansion were hard to tease out of the budget, in large part because they've been lumped together with other program spending in what's called the "baseline." Some of money doesn't even appear in the HHS budget.

For example, a footnote in another section of the budget noted that tax credits to help uninsured middle-class Americans buy private coverage would total about $32 billion next year. Subsidized coverage for middle-class people who don't have access to job-based insurance is the other major prong of Obama's health care law.

Based on reporting by The Associated Press.

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