Immigrants Exploit Our Health Care System…Right?

There’s no easier punching bag in politics today than undocumented immigrants. They can be blamed for any number of problems—including high health care costs. The Federation for American Immigration Reform (FAIR), for example, insists that “the costs of medical care for immigrants are staggering.”

But a handful of hot-off-the-press reports tell a different story. A just released Congressional Budget Office (CBO) study concludes that while immigrants are indeed “more likely [than American citizens] to rely on emergency rooms or public clinics for health care” the cost of caring for immigrants is much less than alarmists would have you believe.

This conclusion clashes with the widespread conception that emergency rooms around the nation are filled to the brim with Mexicans—all on the dime of the American taxpayer. In fact, a November UCLA study showed that “undocumented immigrants from Mexico and other Latin American countries are 50 percent less likely than U.S.-born Latinos to use hospital emergency rooms in California,” the state that incurs the most undocumented immigration-related costs. (The lower rate of hospital use is due to the fact that undocumented immigrants tend to be young and healthy. After all, border-crossing is a rough experience).

Of course, it’s not the rate of health care use that has people worried—it’s the cost of use. But a 2006 RAND study concluded that in 2000, health care for undocumented immigrants between 18 and 64 years old cost taxpayers about $11 per household—roughly the price of a cheeseburger in Manhattan.

Part of the reason the price tag is so low is that our health care
system does only the bare minimum for undocumented immigrants. The CBO
reports that 1986 Medicaid reforms stipulated that immigrants could
receive emergency Medicaid for must-have-care situations like
childbirth. But “emergency Medicaid covers only those services that are
necessary to stabilize a patient; any other services delivered after a
patient is stabilized are not covered.” Undocumented immigrants are
only assured enough health care to make sure they don’t die; so the
costs of emergency Medicaid are very low.

Take the example of Oklahoma, whose legislature passed the most
sweeping anti-immigration bill in the nation earlier this year. The
bill, which took effect on November 1st, is focused on denying jobs and
benefits to undocumented immigrants. Why? Because, as one state legislator put it,
thanks to immigration “the land of opportunity is becoming the land of
entitlement.” But according to the CBO, in 2006 the Oklahoma Health
Care Authority spent .31 percent  (that’s right, less than one-third of
one percent) of its budget on emergency Medicaid for undocumented
immigrants. And since fiscal year 2003, less than one percent of the
individuals served and the dollars spent on Medicaid by the agency have
been related to undocumented immigrants—they’re barely making a dent in
Oklahoma’s system.

It’s not just Oklahoma and California; according to an American Journal of Public Health study,
in 2005, per capita health care expenditures for immigrants were 55
percent lower than for U.S. citizens. And Latino immigrants had the
lowest total health expenditures of all: $962 per person, or half those
of US-born Latinos ($1,870) and less than one third those of US-born
whites ($3,117). Immigrants use less health care than citizens. Period.

Hardliners would say that this is small comfort—any penny spent on
health care for undocumented immigrants is a penny wasted. Putting
aside humanitarian objections to this claim, you can only argue that
point so long as it’s clear immigrants cost more than they contribute.
But that’s not the case.

Undocumented immigrants pay taxes. The CBO reports that in 2004,
undocumented immigrants in Iowa paid between $45.5 million and $70.9
million in state income and sales taxes and New Mexico collected $69
million in income, property, and sales taxes from undocumented
immigrants in 2006. Immigrant payment of sales tax is especially
important, because it reimburses state and local governments.

At the national level, a bigger population means a bigger tax base: undocumented immigrants bolster Social Security with a $7 billion subsidy. In fact, the money that undocumented immigrants paid into Social Security in 2004 added up to 10 percent of that year’s surplus, despite the fact that undocumented immigrants only make up three percent of the American population.

Meanwhile undocumented immigrants also pay Medicare payroll taxes, even though they don’t qualify for Medicare.

All in all, the CBO reports that anywhere between 50 and 75 percent of
unauthorized immigrants pay federal, state, and local taxes. So 25 to
50 percent don’t. By comparison, an IRS study from earlier this year
showed that 16.3 percent of Americans
are in non-compliance with their taxes. Admittedly, CBO also suggests
that governments haven’t been recouping every dollar they spend on
immigrant services through taxes.

But the disparity between immigrants and native tax compliance hardly
seems insurmountable. Presumably a more open and transparent
immigration system would lead to greater compliance.

To effectively weigh the pros and cons of providing immigrant health
care, you also have to consider how much undocumented immigrants
contribute to economic growth. A Pew study from last year showed that
undocumented immigrants add 600,000 to 700,000 new consumers to the
economy every year. Since consumption makes up 70 percent of economic
activity in the U.S., this is important (and of course, more
consumption means more sales tax revenue). Immigration is also expected
to account for one-forth of the Census Bureau’s estimated labor force growth through 2012. Some economic estimates gauge that undocumented immigrants contribute $22 billion, in total, to the economy each year—a number that would increase if they were given the opportunity to become legal.

The bottom line is that undocumented immigrants are giving something
back to the nation, whether populist politicians and pundits want to
admit it or not. Too often the debate over health care and illegal
immigration resembles the welfare queen narrative of the 1980s and
1990s, which depicts  a lazy demographic robbing  hardworking Americans
of their money, laughing all the way to the  bank—or in this case, the
hospital. But this just isn’t the case. There are costs associated with
health care for illegal immigrants; but those costs need to be seen in
context.

Care for undocumented immigrants represents a tiny fraction of the
nation’s health care burden. They receive minimal care; they pay taxes
and contribute to economic growth. When you do the math, it makes a
good deal of sense to spend the little that we do—if not more—to keep
them healthy.