Immigrants subsidize our Medicare program

By Leah Zallman, Steffie Woolhandler, David Himmelstein, David Bor and Danny McCormick
Health Affairs, June 2013

Abstract

Many immigrants in the United States are working-age taxpayers; few are elderly beneficiaries of Medicare. This demographic profile suggests that immigrants may be disproportionately subsidizing the Medicare Trust Fund, which supports payments to hospitals and institutions under Medicare Part A. For immigrants and others, we tabulated Trust Fund contributions and withdrawals (that is, Trust Fund expenditures on their behalf) using multiple years of data from the Current Population Survey and the Medical Expenditure Panel Survey. In 2009 immigrants made 14.7 percent of Trust Fund contributions but accounted for only 7.9 percent of its expenditures—a net surplus of $13.8 billion. In contrast, US-born people generated a $30.9 billion deficit. Immigrants generated surpluses of $11.1–$17.2 billion per year between 2002 and 2009, resulting in a cumulative surplus of $115.2 billion. Most of the surplus from immigrants was contributed by noncitizens and was a result of the high proportion of working-age taxpayers in this group. Policies that restrict immigration may deplete Medicare’s financial resources.

Conclusion

Having ourselves witnessed immigrants dying needlessly because of lack of health care, we (and many of our colleagues) are motivated by the belief that all patients have a human right to health care. But economic concerns—including the worry that immigrants are driving up US health care costs—have often dominated the debate over immigration. Our data offer a new perspective on these economic concerns.

Policies that reduce immigration would almost certainly weaken Medicare’s financial health, while an increasing flow of immigrants might bolster its sustainability. Because Social Security’s eligibility criteria and payroll tax–based funding closely track those of Medicare, our findings support the argument that immigration helps sustain Social Security.

Providing a path to citizenship for currently undocumented immigrants would affect Medicare’s finances in multiple ways. It would likely increase payroll tax collections by reducing immigrants’ “off the books” employment and removing barriers that keep them out of higher-paying jobs. But in the long term it would probably increase the number of immigrants eligible for Medicare, and hence expenditures on their behalf.

However, the age structure of the immigrant population is far more important than either of these factors. Encouraging a steady flow of young immigrants would help offset the aging of the US population and the health care financing challenge that it presents.

http://content.healthaffairs.org/content/early/2013/05/20/hlthaff.2012.1223

Comment:

By Don McCanne, M.D.

Everyone should have health care when needed. Immigrants are taxed to support our Medicare program, yet many of them are prohibited from participating in Medicare, Medicaid, and the state insurance exchanges currently under development. Not fair.

We should have a universal health care financing system – covering all of us – in which we pay in, based on ability, and draw out, based on medical need. As long as immigrants are an integral part of our society, they should be included on the same basis.