Executive Summary

One of the most troubling social trends in recent years has been the rapid increase in the number of people without health insurance. According to the Census Bureau, since 1990 the uninsured population has grown by nearly 10 million and stood at 44.3 million—or one-sixth of the total U.S. population in 1998. Both presidential candidates have proposed major new initiatives costing billions of dollars per year to address the problem.

Efforts to explain the problem have generally focused on trends in employment practices, the rising costs of health care insurance, changes in eligibility for government programs, or the demographic characteristics of the uninsured. To date, relatively little effort has been focused on the impact of immigration policy on this problem. This paper examines the composition of persons without health insurance using the latest data available from the Census Bureau. The findings indicate that while other factors have contributed to the problem, immigration has had an enormous impact on the size and growth of the uninsured population in the United States.

Findings

• In 1998, 32.4 percent of persons living in immigrant households (primarily immigrants and their children) lacked health insurance—more than twice the 13.9 percent of persons in native households without insurance.
• Immigrants who arrived between 1994 and 1998 and their children accounted for 59 percent (2.7 million people) of the growth in the size of the uninsured population since 1993.
• The impact of immigration on the overall size of the uninsured population is dramatic. The total uninsured population is one-third larger (32.7 million versus 44.3 million) when the 11.6 million persons in immigrant households without insurance are counted.
• Immigration has made it much more difficult to reduce the size of the uninsured population. For example, in just the last few years immigration has increased the number of uninsured children in the United States by 700,000, enough to offset most of the gains made so far under the State Children’s Health Insurance Program (SCHIP) enacted by Congress in 1997 at a cost of $4 billion a year.
• Although they comprise 13.1 percent of the nation’s total population, persons in immigrant households now account for 26.1 percent of the nation’s uninsured.
• Lack of insurance remains a severe problem even after immigrants have been in the country for many years. In 1998, 37 percent of immigrants who entered in the 1980s still had not acquired health insurance, and 27.2 percent of immigrants who entered in the 1970s remained uninsured.
• The lack of insurance coverage associated with immigrants is primarily explained by their much lower levels of education and their resulting higher poverty rates relative to natives. Because of the limited value of their labor in an economy that increasingly demands educated workers, many immigrants hold jobs that do not offer health insurance and their comparatively low incomes make it very difficult for them to purchase insurance on their own.
• Low levels of education and a high incidence of poverty do not account for all of the difference between immigrant and native households. Even educated and higher income immigrant households are much more likely to be uninsured than similarly situated natives.
• Continued high rates of Medicaid use (Figure 1) among immigrants coupled with low levels of insurance coverage means that almost half (46.2 percent) of persons in immigrant households either have no insurance or have it provided to them at taxpayer expense.
• In every major immigrant-receiving state and metropolitan area in the country, persons in immigrant households are dramatically more likely to be without health insurance than persons in native households (see Figure 2).
• Health insurance coverage varies significantly by country. Households headed by immigrants from Mexico, Central and South America, and Korea are the least likely to have health insurance, while those from Europe, Canada, and the Philippines are the most likely to be insured.

Factors Not Accounting for the Lack of Insurance Coverage Associated with Immigrants

• Although a very high percentage of illegal aliens do not have health insurance, they comprise only an estimated 26.8 percent of the uninsured living in immigrant households.
• The denial of benefits to some legal immigrants enacted as part of the1996 welfare reform legislation is not the reason so many persons in immigrants households do not have health insurance. Before welfare reform was enacted, nearly 31 percent of persons in immigrant households lacked health insurance, very similar to the current rate. Moreover, immigrant households continue to use Medicaid at higher rates than native households.
• The high percentage of persons in immigrant households without insurance is not explained by the presence of humanitarian immigrants (refugees and asylees). Because they have immediate access to the welfare system, including Medicaid, these immigrants and their children are somewhat more likely to have insurance than are other immigrants.

Why Study Immigration’s Impact on the Size of the Uninsured Population?

One may reasonably ask what effect, if any, does a larger national or local uninsured population have, especially for the majority of the population who do have health insurance? In addition to altruism, there are a number of very practical reasons to be concerned about the level of health insurance coverage in America and the role that immigration policy may be playing in this growing problem.

Impact on the Uninsured Already Here. The most obvious reason for concern is that by increasing the size of the uninsured population, immigration makes it much more difficult to help the uninsured already here. A recent study jointly released by the National Academy of Sciences and the Institute of Medicine concluded that the viability of care providers to the uninsured is more at risk today than ever before partly because of the growing size of the uninsured population. The cost of efforts to provide insurance or just basic care to the uninsured is dependent on the number of people in need of such assistance. If immigration increases the number of people who require government-financed health care, then the total cost of such efforts must grow accordingly. This can only reduce political support for such efforts. Alternately, if federal, state, and local outlays for the uninsured remain the same, then the level of services provided to each recipient must be reduced. This, too, is certainly not in the interest of America’s uninsured. Therefore, if one is concerned about the uninsured already here, significantly increasing the size of the uninsured population is certainly counterproductive.

Effect on Taxpayers. Although they do not have insurance, the uninsured still become sick or injured and require medical care. In many cases, the cost of providing medical services to the uninsured is paid by federal, state, and local governments. Many counties and cities that operate public hospitals and/or clinics and which provide services to the uninsured devote a sizable portion of their total budgets to the uninsured. In addition, health care providers are often reimbursed by the federal government for costs incurred treating the uninsured. While no definitive estimate exists for the reimbursement, it is likely that between $15 and $30 billion a year is spent on the uninsured by government at all levels. These costs do not include the more than $150 billion spent annually to provide Medicaid coverage to low-income residents.

Higher Premiums and Costs for Those with Insurance. While governments at all levels do compensate health care providers for some of the care given to the uninsured, a significant share is not compensated. Providers of health care to the uninsured simply cannot absorb all of the costs of providing such charity care, so they pass at least some of the costs along to paying customers in the form of higher prices for treatment, which in turn creates higher insurance premiums for those with insurance. Thus, a growing uninsured population creates a vicious cycle by driving up premiums, thereby reducing the number of employers who can afford to provide insurance. Additionally, higher premiums push the costs of insurance out of reach for many Americans who must purchase coverage on their own.

Increasing the Risk for the Spread of Communicable Diseases. Because they often do not receive routine preventive care and often seek out medical attention only when their condition is more serious, the uninsured unintentionally extend the period of time the public is exposed to communicable diseases. This problem is of particular concern among immigrants, because most come from developing countries where communicable diseases are more common.

Implications for Immigrant and Immigration Policy. Evaluating health insurance coverage among immigrants and their children is important because it is one way of assessing the consequences of immigration policy. It also affords us the best idea of how immigrants admitted in the future are likely to do if current immigration policy remains unchanged. Low rates of coverage imply that a significant proportion of immigrants have not successfully adapted to life in their new country, at least with regard to health insurance. This is important because without a change in immigration policy, the Census Bureau projects that 11 million new immigrants will likely settle permanently in the United States in just the next decade. If current trends continue, immigration may add an additional three to four million people to the ranks of the uninsured over the next 10 years.

In addition to immigration policy, which is concerned with who may come and how many, there is immigrant policy, which deals with how we treat the foreign-born, living in United States. Examining health insurance coverage among immigrants is important because if a large percentage of immigrants and their children already here lack insurance, we must deal with this problem in a constructive manner, whatever immigration policy is adopted in the future.

Methods and Data

Definitions and Data. The data for this study come from the March 1999 Current Population Survey (CPS) collected by the Census Bureau. The 1999 CPS offers the most recent data available and is the source of most official government statistics on the uninsured. Moreover, it is one of the best sources of information on persons born outside of the United States—referred to as foreign-born by the Census Bureau. For the purposes of this report, foreign-born and immigrant are used synonymously.
This report relies on the definition of insurance used in the government’s publication on health insurance, Health Insurance Coverage 1998: Current Population Report P60-208. Persons are considered to have health insurance if they were covered by insurance in the year prior to the survey provided by an employer, a family member’s policy, the government (primarily Medicaid and Medicare), or insurance they purchased themselves. Because the survey was conducted in March of 1999, it measures insurance coverage for 1998.

Methods. This study examines insurance coverage for persons living in immigrant- and native-headed households. Individuals related to the household head by blood, marriage, or adoption, regardless of their own nativity, are considered to be in an immigrant or native household based on whether the household head is foreign-born or native. Individuals who are unrelated to the head are considered immigrant or native based on the nativity of the head of the family in which they reside. For example, a foreign-born husband and wife (one would be the head) with two young U.S.-born children are counted as four people living in an immigrant household. If the same family rents a room to an unrelated native-born woman with a child of her own, then the women and her child would be counted as a separate native household. Individuals who live by themselves or who live with others to whom they are unrelated are in effect their own households and are considered immigrant or native based on their own nativity. Households are defined in this way so that they more accurately reflect the kind of income sharing and insurance eligibility that exists among members of the same family. Using this definition of household, 92.4 percent of the people living in immigrant-headed households were immigrants themselves or the U.S.-born child (under 21) of an immigrant parent. Therefore, this approach primarily measures insurance coverage for immigrants and their children. Because a child’s standard of living, including access to health insurance, is a function of his or her parents’ income, this method captures the full effect of immigration on the size of the uninsured population in the United States.

Policy Implications

The findings in this paper clearly show that immigration policy has significantly increased the size of the uninsured population in the United States. Assuming that policymakers are concerned about this situation, two sets of policy options would seem to merit consideration. The first set of options might involve a new immigration policy that reduces the flow of immigrants who are likely end up among the ranks of the uninsured. This would help to ensure that immigration does not continue to add to the health insurance problem in the future. The second set of policy options would involve the development and implementation of policies that address the needs of uninsured immigrants and their children already here.

Changing Immigration Policy

The lack of insurance coverage among immigrants stems primarily from their low levels of education and high poverty rates. Because of the limited value of their labor in an economy that increasingly demands a highly educated workforce, workers with few years of schooling are the most likely to hold jobs that pay poverty level wages and do not offer health insurance. Given their limited income, less-skilled workers are also often unable to afford coverage when it is not provided by an employer. In 1998, for example, 19 percent of college-educated adults in immigrant households were uninsured, compared to 53 percent of high school dropouts. Therefore, selecting more immigrants based on their skills would increase the percentage of new arrivals in the future who are able to obtain insurance.

Of course, there are benefits from immigration, and these might be enough to offset the costs associated with the dramatic increase in the uninsured population caused by immigration. In 1997, the National Research Council (NRC) examined the economic effects of immigration and concluded that by holding down the wages of the lowest-skilled workers, immigration creates a very small net benefit to the United States. Of course, lowering the wages of the poorest workers may be viewed by many as a cost rather than a benefit. Moreover, the NRC also found that the net drain on public coffers (tax payments minus services used) from immigrant households is enough to offset entirely the small positive economic effects. While opinions over the costs and benefits of immigration differ, the NRC report does make clear that we can curtail immigration without any worry that it will harm the U.S. economy.

Changing Legal Immigration. In most years, 65 to 70 percent of the 700,000 to 900,000 visas awarded are allotted to the family members of U.S. citizens and lawful permanent residents (LPRs). The Commission on Immigration Reform chaired by the late Barbara Jordan suggested limiting family immigration to the spouses, minor children, and parents of citizens and the spouses and minor children of LPRs—eliminating the preferences for the siblings and adult children of citizens and LPRs as well as the visa lottery. The preference for the spouses and children of non-citizens should also probably be eliminated, since these provisions apply to family members acquired after the alien has received a green card, but before he or she has become a citizen. If the parents of citizens were also eliminated as a category, family immigration would be lowered to roughly 200,000 to 300,000 per year. Humanitarian immigration should also undergo some changes. While the system must remain flexible, and in some years may need to expand well beyond the 50,000 originally intended by the Refugee Act of 1980, keeping refugee admissions at around this level would still allow the United States to take in nearly all of the persons identified by the U.N. High Commissioner for Refugees as needing permanent resettlement. The aforementioned changes would significantly reduce the number of legal immigrants admitted each year without regard to their ability to compete in the U.S. economy. Even with these changes, the United States would continue to accept more than twice as many immigrants as any other country.

Reducing Illegal Immigration. While the overwhelming majority of people living in immigrant households without insurance are legal immigrants or are the U.S.-born children of immigrants, reducing illegal immigration would still be helpful in lowering the number of immigrants entering each year who do not have health insurance. Illegal immigration is undoubtedly the lowest-skilled immigration, with an estimated two-thirds having no health insurance. There is broad agreement that cutting illegal immigrants off from jobs offers the best hope of reducing illegal immigration. Doing so requires three steps: First, a national computerized system needs to be implemented that allows employers to quickly verify that persons are legally entitled to work in the United States. Second, Congress needs to provide more funding so the Immigration and Nationalization Service (INS) can increase worksite enforcement efforts. Third, despite recent increases in funding, more could be done at the border. Controlling the border with Mexico would require perhaps 20,000 agents and the development of a system of formidable fences and other barriers.

The cuts in legal immigration proposed earlier would also help reduce illegal immigration because there are approximately four million people waiting their turn to receive the limited number of visas available each year in the various family categories. Such a system encourages people to simply come to the United States and settle illegally in anticipation of the day their visa is issued. Eliminating the sibling and adult children categories would do away with the huge waiting lists. In the long run, cutting legal immigration would also be very helpful in controlling illegal immigration because recent legal immigrants serve as magnets for illegal immigrants, providing housing, jobs, and entree to America.

Increasing Insurance Coverage Among Immigrants Already in the Country

While lowering the number of less-skilled legal and illegal immigrants entering each year would ensure that fewer immigrants admitted in the future end up among the ranks of the uninsured, it would not immediately increase the rate of insurance coverage among immigrants and their children currently residing in the United States. The most direct and simplest way to provide health insurance to persons in immigrant households would be for the government to provide it. Of course, the primary disadvantage of this approach is the cost. Health coverage for the more than 30 million recipients of Medicaid currently amounts to more than $150 billion a year. Providing coverage to the 11.6 million uninsured in immigrant households, or even only the 7.4 million who live in or near poverty, to say nothing of the poor in native households, would cost billions of dollars a year.

Even if providing coverage to all of the uninsured with low-incomes, including those in immigrant households, is thought to be prohibitively expensive, more can be done to increase their rate of insurance coverage. As we have seen, most persons without health insurance live in households where at least one person works. Thus, one set of options that could be pursued would involve changing regulations and tax policy with the intent of making it less expensive for businesses to provide insurance. In addition, both candidates for president have proposed tax credits for the working poor and near-poor so that they can more easily purchase private health insurance if it is not provided by an employer. So as to contain costs, efforts to provide insurance or tax credits could be specifically targeted at subgroups of the uninsured, such as children or those with the lowest incomes. The new State Children’s Health Insurance Program (SCHIP), enacted by Congress in 1997 at an annual cost of $4 billion, is one such effort. By April of 2000, SCHIP had insured an estimated one million of the 2.5 million low-income children who are eligible. As SCHIP shows, even providing insurance coverage to only a small fraction of the uninsured will not be cheap. It also highlights the necessity of changing immigration policy so that it does not continue to add to the problem.

Conclusion

In any discussion of the impact of immigration on the size of the uninsured population, it is important to keep in mind that immigration is different from other factors that have contributed to the problem because it is a discretionary policy of the federal government. The federal government controls both legal immigration and the level of funding to control illegal immigration. Even if it were desirable, Congress cannot legislate a pause in the advance of medical technology or easily reduce the strong demand for health care in an aging and increasingly secular society, both of which have driven up costs. But it can change immigration policy.

Why Has the Problem Been Ignored?

Part of the reason policymakers and researchers interested in health insurance coverage have not devoted much attention to immigration’s role in this growing problem is that they have generally been focused on other issues such as rising health care costs, changing employment practices, and Medicaid eligibility. In addition, only in 1994 did the Census Bureau begin to ask a nativity question on a regular basis as part of the CPS, making it possible to measure the impact of immigration. Moreover, immigrants are not politically powerful, so politicians can ignore them without paying much of a political price. Additionally, elected officials may be reluctant to call attention to the fact that a policy they have either supported or at least not tried to modify has led to an enormous growth in the uninsured population.

Another important reason the problem has not received the attention it should stems from the fact that most of the advocates for immigrants are also advocates for the current high level of immigration. These advocacy groups cannot call too much attention to the fact that immigration is responsible for a large share of the growth in the uninsured population because to do so would highlight a fundamental problem with the very policy they work so hard to keep in place. Calling for costly new programs to provide health coverage to immigrants would undermine the argument made by the advocates that high immigration is an economic and fiscal boon to the country. This conflict of interest between being an advocate for immigrants and an advocate for mass immigration means that relatively little attention is paid to the millions of immigrants and their children without adequate health care.

A Problem that Cannot be Ignored.

While some may be tempted to ignore the lack of health insurance among immigrants and their children at a time of relative prosperity, this seems very unwise. In just the last four years immigration has increased the size of the uninsured population by 2.7 million people. Without a change in immigration policy and greater efforts to increase health care coverage among immigrant families already in the country, the problem will only grow much worse. The implications of this situation for the immigrants themselves, their children, the nation’s health care system, and society are too important to ignore.