WASHINGTON — Immigrants in the United States both legally and illegally are helping sustain Medicare, contributing about $14 billion more a year to the federal health program for the elderly than they use in medical services, a new study indicates.
The surplus generated by immigrants contrasts sharply with deficits caused by native-born Americans, as medical care for elderly beneficiaries depletes Medicare’s reserves more quickly than working-age U.S. natives can refill them.
The report — published Wednesday in the journal Health Affairs as Congress debates immigration overhaul legislation — does not calculate the full impact of immigrants in the country illegally on all government healthcare programs.
But the authors estimate that these immigrants are helping to support the Medicare program because many pay taxes, while they are ineligible to receive benefits.
“Our study should raise skepticism about the widespread assumption that immigrants drain public healthcare resources,” said Dr. Leah Zallman, an internist and Harvard Medical School instructor who is lead author of the report.
Most legal immigrants, like U.S. citizens, become eligible for Medicare benefits at 65 if they have worked at least 40 quarters in this country. That means many immigrants who today sustain the program will someday draw benefits. But the authors note that, as long as immigration continues, immigrants should not be a drain on the program.
“Policies that reduce immigration would almost certainly weaken Medicare’s financial health, while an increasing flow of immigrants might bolster its sustainability,” the study concludes.
Medicare, which covers about 50 million retired and disabled Americans, is funded partly through payroll taxes that employers and employees pay into a trust fund.
But that fund is slowly being drained as a wave of Baby Boomers retires and healthcare costs continue to rise, if more slowly than in past years. Medicare’s main trust fund is projected to run in the red in 2024.
The new report suggests this deficit is being driven entirely by native-born Americans because the number of retirees is increasing more rapidly than the working-age population.
Today, less than 60% of the U.S.-born population is 18 to 64. By contrast, nearly 80% of foreign-born residents are in their prime working years.
The United States is home to an estimated 40 million foreign-born residents, among whom about 11 million have entered the country illegally or overstayed their visas.
Every year, about 1 million immigrants become legal permanent residents, according to the Department of Homeland Security. Nearly 95% of these new immigrants are under age 65.
By looking at census data, researchers were able to estimate that people born abroad likely paid about $33 billion in payroll taxes to the Medicare trust fund in 2009. The researchers then used Medicare data to estimate that immigrants were responsible for about $19 billion of the program’s medical expenses that year.
Similar surpluses were identified in the previous seven years, leading researchers to calculate that immigrants contributed $115 billion more to Medicare than they consumed in medical services between 2002 and 2009.
U.S.-born people, by contrast, were responsible for a nearly $31-billion Medicare deficit over the same period.
Zallman said the data did not allow researchers to determine how much of the Medicare surplus was generated by immigrants who are in the country illegally, though previous research by the Social Security Administration has estimated that these immigrants contribute billions of dollars to the nation’s retirement programs.
Immigrants in the country illegally often use fake Social Security numbers to work. They and their employers in turn pay Social Security and Medicare payroll taxes, though these immigrants are banned from receiving Medicare benefits.
The new healthcare law also bars immigrants in the country illegally from receiving other health benefits, including insurance subsidies that will be available to millions of low- and moderate-income Americans next year.
Children and pregnant women in the country illegally do qualify for government healthcare assistance through the Medicaid program in some states.
Unlike Medicare, Medicaid is funded almost entirely by general tax revenue collected by state and federal governments.