Immigration a net positive for health care funding in the U.S., study finds
Immigrants tend to be younger and healthier, on average, compared to the general U.S. population.
Two new reports outline the financial benefits that immigrants bring to the U.S., specifically in the area of health care. The research, released by the bipartisan group New American Economy, found that immigrants contribute more to both Medicare and private insurance than is spent on them.
The two reports look at immigrants and health care finances at a time when immigration continues to be a controversial political issue. But like other economic studies, these reports find immigration is a net positive to both Medicare and private health insurance in this country.
Related: Leave health insurers out of immigrant eligibility, AHIP says
The reasons behind these findings are complex, but in general the research shows that immigrants tend to be younger and healthier, on average, compared to the general U.S. population. At the same time, they are paying into health care funding systems, via payroll taxes and insurance premiums, while using relatively fewer health care services.
Immigrants help keep Medicare solvent
One of the ongoing issues of health care funding in the U.S. is the solvency of Medicare, which provides health insurance coverage to senior and others in this country. One of the biggest pieces of the Medicare puzzle is the Hospital Trust Fund, which finances hospital and nursing home coverage.
Research by the New America Economy has found that immigrants contributed billions more to the Trust Fund between 1996 and 2011 than the Trust Fund spent on the same group of people—helping to keep Medicare solvent. This trend has continued in recent years, the study said.
“Between 2012 and 2018 immigrants contributed an average of $165.52 more per capita annually to the Medicare Trust Fund than Medicare spent on their behalf,” the report said. “Over the same time period, the U.S.-born cost the Trust Fund an average of $51.46 per capita, as more was spent on their behalf than was contributed.”
To put it another way, immigrants to the U.S. paid out $151 billion more in Medicare taxes than they used for Medicare services during that six-year time period. At the same time, U.S.-born citizens used $98 billion dollars more in Medicare services than they contributed to the Medicare Trust Fund.
Less utilization equals higher contribution
The story with private insurance is similar, the researchers said. In the second report by the group, the data showed that immigrants spend more than $1,182 per year on health care insurance premiums than insurers spent on their care.
Part of the reason for this is that immigrants tend to utilize health care services less often than native-born U.S. citizens. The study noted that undocumented immigrants are not eligible for government plans such as the Affordable Care Act marketplaces, so employer-sponsored plans are one of the few avenues they have to obtain health insurance.
Again, these workers tend to be younger, which may explain in part their lower health care costs. In general, the study found, the same dynamic seen with Medicare spending was also true for private plan spending on immigrants.
“By calculating the private health insurance premiums paid by, or on behalf of immigrants, and the amounts that private insurers spent for their care, it was estimated that between 2008 and 2014 immigrants contributed $174.4 billion more in premiums than insurers paid out for their care, while, in aggregate, insurers incurred a net loss on the coverage of U.S.-born persons,” the report said.
The report concludes that immigration is helping fund health care for U.S.-born citizens, and that slowing immigration to the U.S. would reduce the number of actuarially desirable people in the U.S. and result in higher insurance premiums for most Americans.
“These findings contradict claims that persons born in the United States subsidize the medical care of immigrants. These claims have focused on immigrants’ use of uncompensated care and Medicaid,” the report said. “However, they ignore the fact that immigrants contribute large subsidies to Medicare’s Trust Funds, and, we find, that immigrants also provide tens of billions in cross subsidies annually to U.S.-born enrollees in private group insurance plans that cover many immigrants, along with U.S.-born persons.”
Read more: