Immigrants’ Premiums Exceed Expenditures

The narrative supported by the Trump administration emphasizes a potential drain that immigrants create on the U.S. economy, especially health care resources. However, previous studies of immigrants’ contributions to Medicare have indicated that immigrants pay more into the system than the benefits they receive. Immigrants who have been documented for fewer than 5 years are generally ineligible for Medicaid and undocumented immigrants are ineligible for both Medicaid and subsidized insurance provided through the ACA Marketplace. A new study examines immigrants’ contributions to private insurance and suggests that this group is not a burden on the health care system.

Using Medical Expenditure Panel Survey (MEPS) and National Health Interview Survey data, a nationally representative sample was created to analyze the difference between premium payments and insurers’ expenditures for care, taking into consideration citizenship and nativity. Net contributions were calculated for U.S. born individuals and the subpopulations of undocumented, legal non-citizen, and citizen immigrants.

Results show that in 2014, immigrants’ premiums totaled $88.7 billion while private insurers’ expenditures for their care totaled $64.0 billion, a net surplus of $24.7 billion. Average premium contributions of immigrants and U.S. born beneficiaries remain similar, yet immigrants’ premium payments exceed expenditures by $1,123 per year per privately insured immigrant (p = 0.09). Comparatively, U.S. natives generated a net deficit of $163 per person. Relative to U.S. natives, immigrants have lower health care use and spending often attributed to their relative youth and high labor-force participation. Even as this population ages, immigrants will make a net contribution to private health insurance regardless of their length of residence in the U.S. 

The findings here contradict assertions that people born in the U.S. are systematically subsidizing medical care for immigrants, particularly the undocumented. On the contrary, immigrants subsidize the U.S. born population in private health insurance markets as well as contribute to Medicare. Policies that curtail the flow of immigration to the U.S. are likely to result in a worsening of the private insurance risk pool. As Democrats regain control of the House of Representatives, it is imperative that the impact of policies spanning a variety of issues are re-examined to prevent the destabilization of the American healthcare system.

Abstract

As US policy makers tackle immigration reform, knowing whether immigrants are a burden on the nation’s health care system can inform the debate. Previous studies have indicated that immigrants contribute more to Medicare than they receive in benefits but have not examined whether the roughly 50 percent of immigrants with private coverage provide a similar subsidy or even drain health care resources. Using nationally representative data, we found that immigrants accounted for 12.6 percent of premiums paid to private insurers in 2014, but only 9.1 percent of insurer expenditures. Immigrants’ annual premiums exceeded their care expenditures by $1,123 per enrollee (for a total of $24.7 billion), which offsets a deficit of $163 per US-born enrollee. Their net subsidy persisted even after ten years of US residence. In 2008-14, the surplus premiums of immigrants totaled $174.4 billion. These findings suggest that policies curtailing immigration could reduce the numbers of “actuarially desirable” people with private insurance, thereby weakening the risk pool.

PMID: 30273017 

Zallman, L, et al. Health Affairs. 2018; 37 (10): 1663–1668.