Immigrants Pay More In Private Insurance Premiums Than They Receive In Benefits

By Leah Zallman, Steffie Woolhandler, Sharon Touw, David U. Himmelstein, and Karen E. Finnegan
Health Affairs, October 2018


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.

From the Discussion

Immigrants contributed far more in premiums for private coverage in 2014 than their insurers paid out for their care, with undocumented immigrants generating the largest per enrollee surplus. This net surplus offset a deficit incurred by US natives and exceeded total insurance industry profits by about $10 billion that year. Our 2014 findings were not anomalous: Immigrants made large net contributions in every year in the period 2008–14, with little change over time.

While immigrants’ premiums were similar to those for US natives, immigrants incurred much lower expenditures—a disparity that was present in analyses limited to working-age adults. Among immigrants, expenditures increased with duration of time in the US, a phenomenon documented previously. This may reflect worsening health habits related to acculturation, increased care-seeking behaviors, and increased educational standing with time in the US. However, because premium contributions also increased with time in the US, immigrants made a net contribution to private health insurance regardless of their length of residence in the US.

Our findings contradict assertions that people born in the US are systematically subsidizing the medical care of immigrants, particularly those who are undocumented. On the contrary, immigrants subsidize US natives in the private health insurance market, just as they are propping up the Medicare Trust Funds.

Immigrants’ subsidies to private insurance and Medicare likely reflect their relative youth and good health, as well as the reluctance of many to seek care. Policies that curtail the flow of immigration to the US are likely to result in a declining number of such “actuarially desirable” persons, which could worsen the private insurance risk pool.…

Immigrants who come to the United States to work are generally relatively young and healthy and thus have little need for health care services, yet they pay payroll taxes into the Medicare Trust Funds and thus are subsidizing health care for U.S. citizens on Medicare. This study adds to that by showing that immigrants, whether or not they are documented, pay more in health insurance premiums that they utilize in health care; thus they are also subsidizing U.S. citizens through the private health insurance market.

Currently the Trump administration is considering a proposed rule that would greatly expand the guidelines for “public charge” – immigrants who use  government services. If they are deemed a public charge, the rule would be used to reduce or revoke their immigration status, perhaps even deporting them from the country in spite of otherwise having complied with immigration requirements. Obviously this could have a deleterious impact on the health of the immigrants and their families, even if they are here legally.

Perhaps the fact that they pay more into Medicare and private health plans than they receive in health benefits should warrant a new concept – “public credit.” Public credit could include other factors such as, for example, the contribution of immigrants to our economy that is significantly greater than the very modest incomes that most of them receive. This and other studies suggest that the public credit would be much larger on the balance sheet than would be the public charge. Surely deportation is not a proper expression of gratitude for the debt that we owe most of them.

The proposed rule on public charge is about to be published in the Federal Register at which time a 60 day period for public comment will begin, after which the rule will be implemented. If we wish to continue to benefit from the contributions of our immigrants, we should consider requesting that a public credit be applied as an offset against the public charge (though that might be a concept that would clash with the ethnic animus of the nationalists in the Trump administration).

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