Social Security

Immigrant Use of Public Resources: Costs and Contributions

Immigrant Health Care Costs

Social Security

From the New York Times article "Illegal Immigrants Are Bolstering Social Security With Billions," by Eduardo Porter (April 5, 2006)

"Currently available for about $150 on street corners in just about any immigrant neighborhood in California, a typical fake ID package includes a green card and a Social Security card. It provides cover for employers, who, if asked, can plausibly assert that they believe all their workers are legal. It also means that workers must be paid by the book - with payroll tax deductions.

IRCA, as the [1986] immigration act is known, did little to deter employers from hiring illegal immigrants or to discourage them from working. But for Social Security's finances, it was a great piece of legislation.

Starting in the late 1980's, the Social Security Administration received a flood of W-2 earnings reports with incorrect - sometimes simply fictitious - Social Security numbers. It stashed them in what it calls the "earnings suspense file" in the hope that someday it would figure out whom they belonged to.

The file has been mushrooming ever since: $189 billion worth of wages ended up recorded in the suspense file over the 1990's, two and a half times the amount of the 1980's.

In the current decade, the file is growing, on average, by more than $50 billion a year, generating $6 billion to $7 billion in Social Security tax revenue and about $1.5 billion in Medicare taxes.

In 2002 alone, the last year with figures released by the Social Security Administration, nine million W-2's with incorrect Social Security numbers landed in the suspense file, accounting for $56 billion in earnings, or about 1.5 percent of total reported wages.

Social Security officials do not know what fraction of the suspense file corresponds to the earnings of illegal immigrants. But they suspect that the portion is significant."

One of the recurring themes in the debate over immigration is the question over the relative strain that immigrants place on public resources versus the contributions that immigrants make to public revenues. Below are some studies and resources that address both sides of the debate.

On one side of the debate, the Center for Immigration Studies (CIS) has produced reports that have focused on the costs of immigration, especially undocumented immigration, for federal and state governments. These reports focus on the deficit between the fiscal contributions of immigrants in the form of payroll taxes and the reliance of immigrants on public assistance programs, such as food assistance and Medicaid.

The first link is to an August 2004 report by Steven A. Camarota, entitled "The High Cost of Cheap Labor: Illegal Immigration and the Federal Budget." Camarota finds that while over half of undocumented immigrants contribute to the federal budget in the form of payroll taxes (creating a benefit for Social Security and Medicare programs of $7 billion annually), the costs of undocumented immigrants to the federal government exceeded their contributions by approximately $10.4 billion. Among the largest costs include Medicaid use, treatment for the uninsured, and participation in food assistance programs. http://www.cis.org/articles/2004/fiscal.html

The second link is another report by Camarota, from March 2003, entitled "Back Where We Started: An Examination of Trends in Immigrant Welfare Use Since Welfare Reform." Its key argument is that while immigrant use of TANF (Temporary Assistance to Needy Families) and food stamp programs has declined significantly as a result of 1996 welfare reform legislation that barred legal immigrants from using certain welfare programs, the decreases have been offset as the number of legal immigrant households relying on Medicaid has increased, along with the associated costs.
http://www.cis.org/articles/2003/back503.html

See also the March 2002 report by George J. Borjas, entitled "The Impact of Welfare Reform on Immigrant Welfare Use." http://www.cis.org/articles/2002/borjas.htm

Other organizations, especially the Urban Institute, have produced reports that dispute some of the claims of research produced by the CIS. A May 2003 report by Marie Wang and John Holahan argues that the March 2003 report by Camarota overstates the number of immigrants receiving Medicaid. If one looks at the individuals enrolled in Medicaid (as other family members will not necessarily be qualified for Medicaid benefits), then the percentage of noncitizen use has actually declined since welfare reform. In fact, 37 percent of the immigrant households that Camarota identifies as receiving Medicaid were households in which all the recipients were native citizens. For more information, see http://www.urban.org/publications/900621.html

Other reports from the Urban Institute emphasize that immigrant families are less likely than native families to receive various welfare benefits, including TANF, food stamps, and the Earned Income Tax Credit, and are less likely to have some form of health coverage. Below are links to a few select reports:

Capps, Randy, Michael Fix, Everett Henderson, and Jane Reardon-Anderson. "A Profile of Low-Income Working Immigrant Families." New Federalism: National Survey of American Families Series B, No. B-67. June 2005. Washington, DC: The Urban Institute. http://www.urban.org/publications/311206.html

Capps, Randy, Michael Fix, Jason Ost, Jane Reardon-Anderson, and Jeffrey S. Passel. "The Health and Well-Being of Young Children and Immigrants." Immigrant Families and Workers: Facts and Perspectives Brief No. 5. February 2005. Washington, DC: The Urban Institute. http://www.urban.org/UploadedPDF/311182_immigrant_families_5.pdf

Fix, Michael, and Jeffrey S. Passel. "The Scope and Impact of Welfare Reform's Immigrant Provisions." Assessing the New Federalism Discussion Paper No. 02-03. January 2002. Washington, DC: The Urban Institute. http://www.urban.org/publications/410412.html

UNDOCUMENTED IMMIGRANTS HEALTH CARE COSTS
(data sources: listserves)

The Issue: Undocumented immigration places an economic burden on the nation's health care system, particularly in the area of emergency care. Hospitals that receive federal funding are legally required to provide emergency care to uninsured patients irrespective of their immigration status or ability to pay for medical services; compliance with this legislative mandate is costly. The items below address this issue.

National Health Care Costs:

Health Care Costs: The Center for Immigration Studies reports that undocumented immigrants cost the federal government $10.4 billion in 2002. Undocumented immigrants' use of federal services such as Medicaid, Medicare, and charity care exceeds the amount they contributed in taxes. [See Camarota 2004 below.]

(Source: kaisernetwork.org. Daily Health Policy Report. "Coverage and Access: Cost to Government of Treating Undocumented Immigrants Totaled $2.5B in 2002, Report Says." August 26, 2004. URL: http://www.kaisernetwork.org/daily_reports/rep_index.cfm?hint=3&DR_ID=25455)

Regional Health Care Costs:

American Southwest: The American Hospital Association estimates that medical treatment for undocumented immigrants in southwestern U.S. hospitals accounts for 25% of uncompensated care. The study, conducted by MGT of America, found that undocumented immigrants cost hospitals along the U.S./Mexico border (Arizona, California, New Mexico, Texas) an estimated $200 million in 2000 in un-reimbursed emergency care costs. California lost $79.6 million in uncompensated care for undocumented immigrants. [See United States/Mexico Border Counties Coalition & MGT of America 2002 below.]

Los Angeles: Undocumented immigrants cost the County of Los Angeles approximately $340 million a year on emergency medical costs and follow-up treatment, according to the Los Angeles County Department of Health. It is estimated that 11.5% of patients who seek emergency care are undocumented. Lisa Richardson, staff writer for The Los Angeles Times, reports that this figure is open to debate. A survey conducted by the UCLA Center for Health Policy Research suggests that uninsured legal immigrants are "the biggest drain on hospitals," not uninsured illegal immigrants (B1).

Federal Response to Uncompensated Costs: The Centers for Medicare & Medicaid Services announced that California would receive approximately $71 million to cover uninsured patients' emergency room costs irrespective of patients' immigration status beginning September 2005. The federal government will reimburse "U.S. hospitals $1 billion over four years to cover the cost of emergency care for uninsured patients." Other states to receive federal aid for uncompensated emergency care costs are Arizona ($45 million), Florida ($8.7 million), Illinois ($10.3 million), New Mexico (unspecified), New York ($12.5 million) and Texas ($46 million).

Sources (listed in the order presented above):
1). Kaisernetwork.org. Daily Health Policy Report. "Coverage and Access: Care of Undocumented Immigrants Straining Hospitals in Southwestern U.S." April 14, 2003. URL: http://www.kaisernetwork.org/daily_reports/rep_index.cfm?hint=3&DR_ID=17166.
2). Kaisernetwork.org. "Coverage and Access: Hospital Care for Undocumented Immigrants in Four Border States Cost $200 Million in 2000, Study Says." September 27, 2002. URL: http://www.kaisernetwork.org/daily_reports/rep_index.cfm?hint=3&DR_ID=13724.
3). California Healthline. "Around California: Los Angeles Times Looks at County Report on Cost of Health Care for Undocumented Immigrants." May 19, 2003. URL: http://www.californiahealthline.org/index.cfm?Action=dspItem&itemID=94598&classcd=CL350#.
4). Richardson, Lisa. 2003. "Immigrant Health Tab Disputed." Los Angeles Times. May 18: B1.
5). California Healthline. "Around California: California to Receive About $71M in Federal Funding This Year to Care for Undocumented Immigrants." May 10, 2005. URL: http://www.californiahealthline.org/index.cfm?Action=dspItem&itemID=111091&classcd=CL350.

Policy Watch:

Medicaid: According to a CNN news clip that aired Thursday, May 4, 2006 (Anderson Cooper 360?), undocumented immigrants who wish to receive Medicaid services will need to provide documentation of their legal status beginning July 1, 2006. The video is currently available for viewing: http://www.cnn.com/HEALTH/ under "Illegal immigration costing doctors, hospitals, taxpayers."

Proposed Legislation: Legislative proposals that provide legal status to undocumented immigrants could increase the cost of entitlement programs, namely Medicaid and welfare. A spokeswoman from the National Conferences of State Legislatures expresses concern over the potential increase in state-level health care costs. A senior fellow from the Center on Budget and Policy Priorities argues that Medicaid would be minimally affected due to the program's income requirements.

(Source: kaisernetwork.org. Daily Health Policy Report. "Capitol Hill Watch: CQ Today Examines Potential Effect of Immigration Proposals on Medicaid Costs." April 18, 2006. URL: http://www.kaisernetwork.org/daily_reports/rep_index.cfm?hint=3&DR_ID=36680.)

REPORTS ON UNDOCUMENTED HEALTH CARE COSTS
(listed in alphabetical order)

Camarota, Steven A. 2004. "The High Cost of Cheap Labor: Illegal Immigration and the Federal Budget." Washington, DC: Center for Immigration Studies. URL: http://www.cis.org/articles/2004/fiscal.pdf

Background: Study is designed to assess the economic impact of illegal immigration on the federal budget.

Data Source: The Census Bureau for the year 2002.

Findings: The federal government provided $26.3 billion in federal services to households headed by undocumented immigrants ("illegal aliens") in 2002, but only collected $16 billion in taxes from undocumented households. The most utilized services include: "Medicaid ($2.5 billion); treatment for the uninsured ($2.2 billion); food assistance programs such as food stamps, WIC, and free school lunches ($1.9 billion); the federal prison and court systems ($1.6 billion); and federal aid to schools ($1.4 billion)" (pg. 5). Undocumented immigrants impact the federal budget due to their low education levels and low incomes (not their excessive use of federal services) and the costs associated with their U.S. born children (who are eligible to enroll in federal programs).

Schurr, Claudia L., Marc L. Berk, Cynthia D. Good, & Eric N. Gardner. 1999. "California's Undocumented Latino Immigrants: A Report on Access to Health Care Services." Henry J. Kaiser Family Foundation. URL: http://www.kff.org/statepolicy/upload/California-s-Undocumented-Latino-Immigrants-A-Report-on-Access-to-Health-Care-Services-Report.pdf

Background: The survey provides empirical evidence on undocumented immigrants' access to health care services. It focuses on undocumented individuals from Latin American countries. It is designed to address the perception that undocumented Latinos enter the U.S. to access social services programs as reflected in Proposition 187.

Sample: 533 undocumented Latino immigrants living in Los Angeles and Fresno Counties (California) were interviewed in 1996-1997. "A companion study of undocumented Latinos in Texas … was conducted in El Paso and Houston in 1996" (pg. 3).

Findings:
1. Undocumented Latinos immigrate to the U.S. to find work. "One percent or fewer of the undocumented Latinos in each site" stated that they entered the U.S. to obtain social services (pg. 6).
2. The government programs undocumented Latinos most use are:
a). Public school enrollment and free or reduced price lunches (many children are U.S. citizens)
b). Supplemental Nutrition Program for Women, Infants, and Children (WIC)
c). Medicaid (primarily for "non-emergency pregnancy related care and emergency care") (pg. 7).
d). Food stamps (for U.S. born children - undocumented immigrants are ineligible to receive food stamps).

United States/Mexico Border Counties Coalition & MGT of America. 2002. "Medical Emergency: Costs of Uncompensated Care in Southwest Border Counties." Washington, DC & Austin, TX. URL: http://www.bordercounties.org/vertical/Sites/{B4A0F1FF-7823-4C95-8D7A-F5E400063C73}/uploads/{FAC57FA3-B310-4418-B2E7-B68A89976DC1}.PDF

Background: States absorb a significant portion of the health care costs associated with undocumented immigrants' use of emergency medical care and transportation services. Uncompensated care results in loss of hospital revenue.
Data Source: The analysis for this report began in Fall 2001. Data derives from a variety of sources. It includes a written survey of 77 hospitals and 82 emergency transportation providers, field research of the four states along the U.S./Mexico border - Arizona, California, New Mexico, Texas (24 counties), and other data sources (pg. 6).
Findings: The consulting firm, MGT of America, found that "almost $190 million or about 25 percent of the uncompensated costs" within southwest border county hospitals were due to the provision of "emergency medical treatment" for undocumented immigrants in 2000 (iii). The dollar figure includes transportation service costs, but not physician costs. The authors assert that the report's findings support the argument that state hospitals need federal aid to cover the costs of uncompensated care.