Study: Immigrants Heavily Subsidizing Medicare System

For many opponents of immigration reform – and immigration generally – it’s become an article of faith that the cost of immigration far outstrips its benefits. The corollary, whether shouted or politely whispered, is that immigrants somehow consume more than their fair share of various social support programs, leaving overburdened native-born taxpayers to foot the bill.

This narrative remains popular in some quarters because it lends a gloss of policy-wonkish neutrality and legitimacy to arguments that often are flatly xenophobic – or worse. It seems to have persisted not because it’s true – it isn’t – but because it’s a useful political tool. It’s a prime example of what social scientists call “negative integration” – defining group identity in terms of who we are not: we are us because we are not them. It also smacks of “scapegoating,” blaming others – in this case, immigrants – to avoid responsibility for our own problems.

As we noted in a recent post, Social Security’s coffers actually are in better fiscal shape than they would be without the billions of dollars immigrants have contributed to over the years – contributed without taking much out of the system. Immigrant contributions to the long-term solvency of Social Security are both substantial and well documented. [See Los Angeles Times: Immigration Will Help Retiring Baby Boomers, MurthyBlog, 20.May.2013.]

Immigrant contributions also are propping up the Medicare system – to the tune of more than a hundred billion dollars from 2002 to 2009 – according to a team of researchers at Harvard University and the City University of New York. [See Immigrants Contributed an Estimated $115.2 Billion More to the Medicare Trust Fund Than They Took Out in 2002-09, by Leah Zallman, Steffie Woolhandler, David Himmelstein, David Bor, and Danny McCormick, Health Affairs, Jun.2013.] After carefully examining Medicare revenues and expenditures for immigrant and nonimmigrant populations, the study concludes that:

“Immigrants, particularly noncitizens, heavily subsidize Medicare. In 2009 immigrants contributed $13.8 billion more to the HI [Hospital Insurance] Trust Fund than it paid out on their behalf. Most of this surplus came from noncitizens. Between 2002 and 2009 immigrants’ cumulative surplus contributions totaled $115.2 billion.”

Elsewhere in the study, the Harvard/CUNY team notes that in 2009, “the U.S.-born generated a deficit of $30.9 billion” in the Medicare system. Why this disparity? The demographics of immigration play a key role, according to the researchers: as a group, immigrants tend to be younger and have a higher degree of workforce participation than their American counterparts, so they generate more payroll tax revenue – a principal funding source for the Medicare Trust Fund.

Actual immigrant contributions to the Medicare Trust Fund may be even higher than what the study finds; the researchers took pains to ensure that its methodology would not overstate immigrant contributions. They note, “Our data may undercount noncitizens’ surplus since undocumented immigrants may avoid government surveys such as the Current Population Survey,” which gathers population data for the government, and which supplied critical statistical benchmarks for the study.

The researchers carefully point out that it’s unclear whether immigrants subsidize the health care system as a whole, beyond Medicare. However, they note that, “Although most political discourse regarding immigrant health care financing has focused on uncompensated care, that care accounts for a far smaller proportion of national health care spending than Medicare does (2 percent versus 21 percent).”

They caution, “our finding that immigrants heavily subsidize the HI [Hospital Insurance] Trust Fund should raise skepticism about the widespread assumption that immigrants consistently drain public resources.” Hopefully, their study will help convince those in the anti-immigrant camp – especially our lawmakers – to stop blaming immigrants, and start appreciating their many contributions to American society.

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