A study finds that immigrants pay more into Medicare than they consume

The Medicare trust fund would be quite a few billion dollars smaller without the contributions of immigrants — especially those in the U.S. illegally, the source of fractious debate in current immigration reform legislation.

In 2009, according to a new Health Affairs study, both legal and undocumented immigrants contributed a combined $33.6 billion to the Medicare hospital insurance trust fund, almost 15 percent of all contributions, while using about $19.3 billion in Medicare hospital expenditures (about 8 percent Medicare hospital spending).

Immigrants comprised just under 14 percent of the U.S. population in 2009, according to U.S. Census estimates, and generated a $13.8 billion surplus for Medicare that year, according to estimates by Leah Zallman, MD, a researcher at the Institute for Community Health and a Harvard Medical School instructor, and her colleagues.

U.S. citizens using Medicare, meanwhile, consumed almost $31 billion more than they paid into the hospital insurance trust fund in 2009, according to Zallman and colleagues, who published their findings in the online edition of Health Affairs.

The estimates are based on linked data from the Medical Expenditure Panel Survey and the National Health Interview Survey, and the researchers say it’s the first study quantifying immigrants’ share of contributions to a U.S. healthcare sector (although the conservative Center for Immigration Reform estimated in 2004 that undocumented households were contributing more than $7 billion to Medicare and Social Security).

“The surplus, if any, that immigrants provide to the health care system as a whole — or to programs other than Medicare — is not known,” and for some government programs, legal and illegal immigrants may withdraw more resources than they contribute, Zallman and colleagues write.

“However, our finding that immigrants heavily subsidize the HI Trust Fund should raise skepticism about the widespread assumption that immigrants consistently drain public resources.”

While a lot of political rhetoric, particularly among conservatives, focuses on uncompensated care for immigrants, that care accounts for “a far smaller portion of national healthcare spending than Medicare does,” about two percent versus 21 percent, Zallman et. al. write, citing a 2008 Health Affairs study on sources of spending on uninsured patients.

For all of the years studied, 2002 to 2009, the researchers found immigrants contributed a surplus to the Medicare hospital insurance trust fund, paying $115 billion more than they used over that time.

How exactly immigrants are paying into Medicare isn’t entirely clear, but there are a few ways known for sure and known anecdotally.

Immigrants living in the U.S. under a legal status typically pay payroll taxes with valid Social Security numbers. Undocumented immigrants working in a variety of industries are, in many if not most cases, likely paying payroll taxes under fake Social Security numbers obtained for the purposes of meeting federal employment law. Some undocumented immigrants may actually be paying self-employment taxes; while many are surely being paid “under the table.”

The researchers also found immigrants who are using Medicare benefits consume fewer dollars on average — $3,923 per capita, compared to $5,388 for U.S.-born citizens.

Aside from age — immigrant populations are typically younger and have higher dependency ratios than U.S.-born citizens — the researchers pointed to several factors in immigrants’ contributions to Medicare surpluses.

For one thing, some immigrants paying payroll taxes won’t ever use the benefits; even if they’re eligible, some will retire to their home countries. For another, some elderly immigrants won’t be eligible for Medicare if they don’t work the required 10 years in the U.S., and others won’t be eligible because they lack legal status.

Partially wading into the current political debate over the Senate’s “Gang of Eight” immigration reform bill, Zallman and colleagues write that policies reducing immigration “would almost certainly weaken Medicare’s financial health, while an increasing flow of immigrants might bolster its sustainability.”

And they argue that a path to citizenship for currently undocumented immigrants — which in the current Senate bill is long and bureaucratic — would “likely increase payroll tax collections by reducing immigrants’ ‘off the books’ employment and removing barriers that keep them out of higher-paying jobs.”

In the long-term, though, it could also mean an increase in Medicare beneficiaries and “hence expenditures on their behalf.”

The current version of the Senate immigration bill, which is ready for a Senate vote after a marathon amendment session, actually doesn’t mention Medicare or Medicaid by name. But it appears that immigrants who complete the 10 year provisional lawful resident status and eventually become citizens would be eligible for Medicare and Social Security benefits (to the extent they pay into the latter).

Social Security photo from Shutterstock.com.