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For Medicare, Immigrants Offer Surplus, Study Finds

The New York Times, 5/29/13

Immigrants have contributed billions of dollars more to Medicare in recent years than the program has paid out on their behalf, according to a new study, a pattern that goes against the notion that immigrants are a drain on federal health care spending.

The study, led by researchers at Harvard Medical School, measured immigrants’ contributions to the part of Medicare that pays for hospital care, a trust fund that accounts for nearly half of the federal program’s revenue. It found that immigrants generated surpluses totaling $115 billion from 2002 to 2009. In comparison, the American-born population incurred a deficit of $28 billion over the same period.

The findings shed light what demographers have long known: Immigrants are crucial in balancing the age structure of American society, providing an infusion of young, working-age adults who support the country’s aging population and help cover the costs of Medicare and Social Security. And with the largest generation in the United States, the baby boomers, now starting to retire, the financial help from immigrants has never been more needed, experts said.

Individual immigrant contributions were roughly the same as those of American citizens, the study found, but immigrants as a group received less than they paid in, largely because they were younger on average than the American-born population and fewer of them were old enough to be eligible for benefits. The median age of Hispanics, whose foreign-born contingent is by far the largest immigrant group, is 27, according to the Brookings Institution. The median age of whites in the United States is 42.

The study, which was published on the Web site of the journal Health Affairs on Wednesday, comes as Congress considers legislation that would eventually give legal status to the country’s 11 million unauthorized immigrants. The legislation has sparked a vigorous debate about whether immigrants ultimately contribute more than they receive from the federal budget. One of the sticking points has been whether immigrants should be eligible for government programs, including health benefits, before they qualify for citizenship, but while they are on the path to getting it.

The study was concerned only with Medicare, the federal program that accounts for about a fifth of all American health care expenditures. Experts said that the study’s findings served as a useful reminder that immigrants, at least for now, are extending the life of the beleaguered program, not hastening its demise.

“There’s this strong belief that immigrants are takers,” said Leighton Ku, the director of the Center for Health Policy Research at George Washington University. “This shows they are contributing hugely. Without immigrants, the Medicare trust fund would be in trouble sooner.” The belief prevails, for example, among some opponents of immigration reform.

The study did not grapple with the health care costs of immigrants over their full lifetimes, a calculation that economists say is critical to understanding their long-term impact on the federal budget.

“It’s just a snapshot of a point in time,” said Paul Van de Water, a visiting fellow at the liberal-leaning Center on Budget and Policy Priorities.

The study drew on two nationally representative federal surveys from the Census Bureau and the Department of Health and Human Services. Researchers included the contributions of legal residents who were not citizens, a group that is eligible for Medicare if certain requirements are met; unauthorized immigrants; and citizens who were born abroad.

It was not clear how much of the surplus was made up of earnings by immigrants in the country illegally, who are ineligible for most government programs.

The finding “pokes a hole in the widespread assumption that immigrants drain U.S. health care spending dollars,” said Leah Zallman, an instructor of medicine at Harvard Medical School and the lead author of the study.

Similar calculations have been made for Social Security. The chief actuary of the Social Security Administration, Stephen C. Goss, estimated that immigrants in the country illegally, some of whom assume fake Social Security numbers to provide cover for employers, generated a surplus of about $12 billion for the Social Security Trust Fund in 2010.

But that equation would change if unauthorized immigrants were to gain legal status under a new law and eventually began collecting Social Security once they were of retirement age. One major policy question is how much that might cost, experts said.

The Heritage Foundation, a conservative institute, estimated that the legislation’s changes, if implemented, could cost taxpayers more than $6 trillion. Critics of that calculation said it did not take into account the economic benefits that would arise from taking millions of people out of the shadow economy.

Mr. Goss, in a letter this month to Senator Marco Rubio, a Florida Republican, said that the legislation’s effect on the long-term health of Social Security would be positive in the long term.

Immigrants tend to be healthier than American-born citizens, and have lower mortality rates, research has found. Dr. Ku said there was evidence that individual immigrants actually use less health care than native-born Americans. He has calculated, for example, that immigrants’ medical costs were 14 percent to 20 percent less than those who were born in the United States, even after controlling for other factors such as emergency room visits and insurance coverage, which fewer immigrants have.

The study found that average expenditures among immigrant Medicare enrollees in 2009 were $3,923, lower than the average $5,388 expenditure among the American-born. The difference, however, was just shy of statistical significance, because of wide variations in medical expenditures and the small numbers of immigrant enrollees, which made the study’s margin of error wide.

Robert Rector, a senior research fellow at the Heritage Foundation, who is an author of the institute’s report earlier this month, said that looking at Medicare alone was not very useful, as it was just one slice of the entire entitlement pie. And the large immigrant youth population, which the study spends most of its time on, is familiar, he said.

“It’s a yawner of a study,” he said. “Young people don’t get Medicare. We don’t need several Ph.D.s to tell us that.”

Others defended the findings, saying that they showed immigrants were helping prop up the country’s retirement funds at the critical point when baby boomers were starting to retire.

“They’ll be paying into the system at the very time it is most strained,” said Patrick Oakford, a researcher on economic and immigration policy at the Center for American Progress, a liberal-leaning institute. He estimated that the average undocumented immigrant was 34 and therefore would not retire until 2046.

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