Legal Immigration—The Bigger Obamacare Problem

An interesting post from http://www.vdare.com/ about LEGAL immigration's problems in Obamacare! You can subscribe to this post here for more stories like this!

National Data, By Edwin S. Rubenstein
Legal Immigration—The Bigger Obamacare Problem

Health care a divisive issue? No way. Not when you ask the right questions.Fully 80 percent of Americans say they don’t want illegal aliens to be covered by government subsidized health insurance. A Rasmussen Poll shows only 11 percent supported it. A full 70% said that it would be a dealbreaker.
Even the Wall Street Journal’s Miriam Jordan, winner of VDARE.COM’s 2008 Worst Immigration Reporter Award, has been compelled to acknowledge the issue’s power: [Illegal Immigration Enters the Health-Care Debate In California, Funding Is at Stake for a Clinic That Treats Patients No Matter Their Status; An Issue 'No One Wants to Touch', August 15, 2009].
To quote Washington Watcher on VDARE.com: "Not wanting to be completely at odds with the American people, when Barack Obama was asked by Katie Couric if he thought illegal aliens should be covered, he first said 'no'".
But then he weaseled out:“First of all, I’d like to create a situation where we’re dealing with illegal immigration, so that we don’t have illegal immigrants [VDARE.COM note: i.e. amnesty them]. And we’ve got legal residents or citizens who are eligible for the plan. And I want a comprehensive immigration plan that creates a pathway to achieve that.”
(VDARE.COM emphasis.) Note Obama’s implication: legal immigrants are welcome to whatever health care benefits are available.
But here’s the problem: the long-term budget crisis is essentially a health care crisis—and neither crisis can be resolved without curbing legal immigration.
Two recent reports present the basic facts.
First, the Congressional Budget Office's latest long-term budget forecast estimates that federal spending for Medicare and Medicaid alone will rise from 5.3% of the Gross Domestic Product this year to 6.4% in 2020 and 10% in 2035.According to the CBO, and rather surprisingly, most of this growth is accounted for by increased spending per beneficiary as a result of improved techniques, rather than the aging of the population.
Second, a Pew Foundation study (see table below) finds that new (post-2005) immigrants and their U.S.-born children and grandchildren will account for 82 percent of U.S. population growth through mid-century.
The 1990 immigration law supposedly "capped" legal immigration at 700,000 people a year. Yet, for technical reasons, there have been only two years in which legal immigration has been below that level since 1990.
In 2006, 2007, and 2008 the number of people granted permanent resident status was 1,266,129; 1,052,417; and 1,107,126, respectively.
These totals comprise the largest influx of legal immigrants since the post-IRCA amnesty spike of the early 1990s—which reflected the 1986 amnestying of illegal aliens already here.Let’s be cock-eyed optimists and assume illegal immigration is halted entirely (but the illegal stock here is not deported, and their children are still treated as anchor babies). That would leave native-born Americans, plus new legal immigrants and their U.S.-born descendants, to increase the health care rolls. Under that scenario, the immigrant-related share of U.S. population growth declines—but only to a still-astonishing 78 percent:
U.S. Population Growth With/withoutIllegal Immigration,
2005-2050
Status quo
Zero illegal immigration (b) Total 142.4 mil. 113.mil.
Native 25.4mil. 25.mil.
Foreign-born (a) 117.0 mil. 88.0 mil.
Foreign-born 82% 78%as % of total
a. Includes U.S.-born descendants. b. Assumes illegals account for one-quarter of foreign-born population growth under status quo.Source: Jeffrey Passel and D'Vera Cohen, "U.S. Population Projections: 2005-2050",Pew Hispanic Center, February 11, 2008. PDF (Status quo)
Health care is more than just a federal budget issue. It burdens the entire economy, as evidenced by the fact that total spending on health care—Medicare, Medicaid and all other public and private spending—has doubled over the last 30 years, to a current level of about 16% of GDP. By mid-century CBO estimates that this percentage will reach 37 percent of GDP.
In other words, 21 percent of 2050’s GDP will be needed just to accommodate the increase in health care costs between now and then. In today’s economy, that translates to an added $3.0 trillion of health care expenses.
How much of the increase will be due to legal immigration? There are many moving parts to any such estimate. New immigrants are younger than natives, but they also have more children. It’s not at all clear that their fertility rates will fall to that of natives. And new immigrants eventually become old immigrants.
We can cut through the complexity by sticking to the basics.
If legal immigrants’ impact on health care equals their projected impact on population growth, they will account for 78 percent of the rise in such costs between now and 2050. Under this scenario 16.4 percent (78 percent of 21 percent) of GDP in 2050 will be needed just to cover the rise in health care costs caused by new (post-2005) legal immigration. (This includes not only caring for the new immigrants, but for their US-born children and grandchildren.)
In today’s economy that’s the equivalent of $2.3 trillion in added spending. By comparison, the federal budget deficit for FY2009 is estimated to be $1.8 trillion.
If you cut that in half, say, because new immigrants are younger than native-born Americans, the excess burden imposed on the American taxpayer falls—but only to 8.2 percent of 2050 GDP.In today’s economy, that translates into immigrants causing $1.2 trillion in added spending—equivalent to two-thirds of the projected deficit.
These are gross amounts. And, of course, as immigration enthusiasts constantly remind us, immigrants pay taxes too.
But not as much—federal health care, and government programs of all sorts, are still a net transfer to them.
One reason for this: because immigrants earn less, they pay less tax. In 2008, Median weekly earnings of immigrant workers were 20% below native-born Americans—and 24.5 percent below earnings of white non-Hispanic native-born American whites ($595/wk for immigrants vs. $744/wk for all native-born Americans and $788/wk. for native whites.) Foreign-born males earned 27 percent less than their native-born American counterparts.
And as immigrants get older, they seem to fall further behind natives. In 2008, for example, median earnings of foreign-born workers age 16 to 24 were 89.1 percent of the earnings of native-born workers in that age bracket. Among workers aged 55 to 64, immigrants earned only 77.9 percent of natives in that age bracket earned.
Another snapshot of greater immigrant dependency: Medicaid recipiency rates. Medicaid, the federal government’s health program aimed at the poor, is a pure transfer payment, unlike Medicare—there are no payroll tax contributions from recipients. In 2007, recipiency rates were:
24.4%: all immigrants
28.1% Hispanic immigrants
14.7%: all natives
11.5%: non-Hispanic white natives
Obviously, if immigrants are in the U.S. legally, it will be very difficult to deny them services extended to the native-born. But this inevitably means that U.S. taxpayers will be subsidizing the legal immigrant presence.
It’s a painful paradox. It’s one reason Milton Friedman, Nobel Laureate and clearly the outstanding economist of the twentieth century, told Peter Brimelow in one of their interviews in Forbes Magazine "It's just obvious that you can't have free immigration and a welfare state." [Forbes Magazine, December 29, 1997].
There is only one way to stop Obamacare from being yet another transfer program forcing American taxpayers to subsidize immigrants: an immediate and permanent immigration moratorium.
Edwin S. Rubenstein (email him) is President of ESR Research Economic Consultants in Indianapolis.