BILL ANALYSIS Ó
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THIRD READING
Bill No: AJR 7
Author: Bonta (D)
Amended: As introduced
Vote: 21
ASSEMBLY FLOOR : 42-17, 4/1/13 - See last page for vote
SENATE HUMAN SERVICES COMMITTEE : 4-0, 4/23/13
AYES: Yee, Evans, Liu, Wright
NO VOTE RECORDED: Berryhill, Emmerson
SUBJECT : Social Security, Medicare, and Medicaid
SOURCE : California Alliance for Retired Americans
DIGEST : This resolution requests the President and the United
States Congress to exclude Social Security, Medicare, and
Medicaid from being a part of any legislation to reduce the
federal deficit, expresses the Legislature's opposition to cuts
to those programs, and calls on California's representatives to
the United States Congress to vote against cuts to these
programs and instead to consider improving those systems in ways
that would strengthen their protections.
ANALYSIS :
Existing federal law:
1.Establishes the Social Security Act, a system of federal
benefits for aged and low-income people.
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2.Provides Social Security income for aged and disabled persons.
3.Establishes Medicare, a federal health insurance program for
aged and disabled people.
4.Provides grants to states for medical assistance programs to
low income families and individuals (Medi-Cal, in California).
This resolution makes the following findings and declarations:
1.Social Security and Medicare are the foundations of income and
health security for older Californians and those with severe
work disabilities, providing monthly cash benefits and health
insurance to over 5 million Californians, including 3.4
million retirees and nearly 700,000 disabled workers.
2.Social Security is the single most important source of life
insurance protection for California's children and provides a
vital guaranteed income to 370,000 children throughout the
state.
3.Social Security provides benefits to more than 9 million
veterans nationwide, which is roughly 4 out of 10 veterans.
4.Social Security annually contributes nearly $67 billion
dollars to California's economy by paying benefits to over 5.1
million residents in the state.
5.Social Security's funding is independent of that of the rest
of the federal government, and has never contributed to, and
by law can never contribute to, the federal deficit. Social
Security, in fact, has a surplus of $2.7 trillion today that
is expected to grow to $3.1 trillion by 2020.
6.Social Security is not in crisis and has sufficient resources
to meet all of its obligations through 2032 and has dedicated
revenues that would - even in the absence of Congressional
reforms - meet three-quarters of promised benefits thereafter.
7.There are many policy options available to close Social
Security's funding shortfall without cutting benefits,
including eliminating the cap on earnings subject to the
payroll tax, which would eliminate about 80% of the 75-year
shortfall, or raising the payroll tax rate from 6.2% to 7.2%
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gradually over 20 years, which would eliminate one-half of the
shortfall.
8.Forty-seven percent of elderly Californians are struggling
just to make ends meet and more than one-half of working
Californians will not have saved enough to be able to maintain
their standard of living in retirement.
9.Proposals to increase the Social Security retirement age to 69
would cut benefits by an additional 13% on top of the 13% cut
that occurred when the retirement age increased from 65 to 67.
Although increasing the eligibility age for Medicare would
save the federal government some money, it would add billions
of dollars to what we, as a country, spend on health care and
shift costs onto other governmental entities, businesses, and
many individuals who cannot afford those costs.
10.Medicare insures almost 4 million California seniors for
health care at a fraction of the administrative costs of
private plans. Medicare has controlled its costs better than
private insurance plans.
11.Medicaid is a critical source of protection for over 11
million low-income children, adults, and elderly Californians,
many of whom have severe disabilities or are in need of
long-term care.
This resolution takes the following actions:
1.Urges the President and the Congress of the United States to
exclude Social Security, Medicare, and Medicaid from being a
part of any legislation to reduce the federal deficit.
2.Resolves that the California State Legislature opposes cuts to
Social Security, Medicare and Medicaid, and calls on our
state's representatives in Washington, D.C. to vote against
any cuts and consider improving those systems in ways that
will strengthen their protections.
3.Resolves that the Chief Clerk of the Assembly transmit copies
of this resolution to the President and Vice President of the
United States, to the Speaker of the House of Representatives,
to the Majority Leader of the Senate, and to each Senator and
Representative from California in the Congress of the United
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States.
Background
Medicare is the federal health insurance program that guarantees
access to health care for people who are 65 or older, certain
younger people with disabilities, and people with End-Stage
Renal Disease (permanent kidney failure requiring dialysis or a
transplant).
In 2012, Medicare provided health insurance to nearly 50 million
people nationwide (roughly 4.2 million older individuals and
700,000 disabled individuals in California). On average,
Medicare covers about half (48%) of health care costs for
enrollees. Medicare enrollees must cover the rest of the cost.
They include uncovered services such as long-term services and
supports, dental services, hearing, and vision care.
Medicare is funded through payroll taxes paid by most employees,
employers, and people who are self-employed. Other sources,
like income taxes paid on Social Security benefits, interest
earned on the trust fund investments, and Medicare Part A
premiums from people who aren't eligible for premium-free Part A
also support the program.
Medicaid is the U.S. health insurance program for certain people
and families with low incomes and resources. Medicaid was
enacted in 1965 through amendments to the Social Security Act.
Medicaid is a health and long-term care coverage program that is
jointly financed by states and the federal government.
Each state establishes and administers its own Medicaid program
and determines the type, amount, duration, and scope of services
covered within broad federal guidelines. In California, the
Medi-Cal program includes 7,505,841 enrollees as of January
2011. States must cover certain mandatory benefits and may
choose to provide other optional benefits. Federal law also
requires states to cover certain mandatory eligibility groups,
including qualified parents, children, and pregnant women with
low income, as well as older adults and people with disabilities
with low income. States have the flexibility to cover other
optional eligibility groups and set eligibility criteria within
the federal standards. Medicaid is funded through federal
general revenues and other special financing structures that
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create revenue to support services and benefits.
Social Security is a social insurance program consisting of
retirement, disability, and survivors' benefits. About one
household in four receives income from Social Security. Social
Security is largely a pay-as-you-go program. This means that
today's workers pay Social Security taxes into the program and
that money is then distributed as a monthly benefit to
individuals who previously paid into the program and have since
retired. Taxes currently being collected are not contributing
to an individual's own Social Security savings; and individual's
future benefits are paid by the contributions made by a younger
generation. As a pay-as-you-go system, Social Security differs
from company pensions, which are "pre-funded."
Social Security is financed through a dedicated payroll tax.
Employers and employees each pay 6.2% of wages up to the taxable
maximum of $113,700 in 2013, while the self-employed pay 12.4%.
The maximum Social Security benefit for a worker retiring at the
2012 full retirement age of 66 is $2,366 per month.
U.S. Budget, Debt, and Deficit: According to the President's
Office of Management and Budget, public debt increases or
decreases as a result of the annual unified budget deficit or
surplus. The federal government budget deficit or surplus is
the difference between government receipts and spending, not
including governmental transfers. Since 1972, the U.S. annual
unified budget has been balanced, or generated a surplus, four
times, between 1998 and 2001. Historically, the U.S. public
debt as a share of the Gross Domestic Product increased during
wars and recessions, and subsequently declined.
On March 11, 2013, in an editorial published by the Wall Street
Journal, Congressman Paul Ryan declared the national debt at $16
trillion, as he introduced a federal budget proposal which will
achieve a "balanced" budget in 10 years through various
reductions in expenditures in Medicare and Medicaid, among other
things.
This resolution requests the President and the United States
Congress to exclude Social Security, Medicare, and Medicaid from
being a part of any legislation to reduce the federal deficit,
expresses the Legislature's opposition to cuts to those
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programs, and call on California's representatives to the United
States Congress to vote against cuts to these programs and
instead to consider improving those systems in ways that would
strengthen their protections.
FISCAL EFFECT : Fiscal Com.: No
SUPPORT : (Verified 4/23/13) (per Senate Human Services
Committee Analysis of 4/23/13-unable to reverify at time of
writing)
California Alliance for Retired Americans (source)
AARP
California Federation of Teachers
California Labor Federation
California School Employees Association, AFL-CIO
County Welfare Directors Association of California
Western Center on Law and Poverty
ARGUMENTS IN SUPPORT :
According to author, AJR 7 expresses the Legislature's
opposition to cuts to Social Security, Medicare, and Medicaid,
and calls on California's representatives to the United States
Congress to vote against cuts to Social Security, Medicare, and
Medicaid and to consider improving those systems in ways that
would strengthen their protections.
ASSEMBLY FLOOR : 42-17, 04/01/13
AYES: Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chesbro, Dickinson, Eggman, Fong, Frazier,
Garcia, Gatto, Gordon, Gray, Hall, Roger Hernández,
Jones-Sawyer, Levine, Mitchell, Mullin, Nazarian, Pan, Perea,
Rendon, Skinner, Stone, Ting, Torres, Weber, Wieckowski,
Williams, Yamada, John A. Pérez
NOES: Achadjian, Allen, Bigelow, Conway, Dahle, Donnelly, Beth
Gaines, Grove, Harkey, Jones, Maienschein, Mansoor, Melendez,
Olsen, Patterson, Wagner, Wilk
NO VOTE RECORDED: Chávez, Cooley, Daly, Fox, Gomez, Gorell,
Hagman, Holden, Linder, Logue, Lowenthal, Medina, Morrell,
Muratsuchi, Nestande, V. Manuel Pérez, Quirk, Quirk-Silva,
Salas, Waldron, Vacancy
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JL:ej 4/24/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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