By now, I’m sure we’re all familiar with when The Ninja Turtles Joe Wilson called Obama out for lying about the health care bill’s plans to cover illegal immigrants. The bill, of course, does not cover illegals, a proposition which would be politically impossible to get anywhere close to. But, regardless of feasibility, is it something we should consider? Newsweek’s Anderw Romano takes a closer look:
According to a July article in the American Journal of Public Health, immigrants typically arrive in America during their prime working years and tend to be younger and healthier than the rest of the U.S. population. As a result, health-care expenditures for the average immigrant are 55 percent lower than for a native-born American citizen with similar characteristics. With the ratio of seniors to workers projected to increase by 67 percent between 2010 and 2030, it stands to reason that including the relatively healthy, relatively employable and largely uninsured illegal population in some sort of universal health-care system would be a boon rather than a burden. “Insurance in principle has to cover the average medical cost of all the people it’s serving,” explains Leighton Ku, a professor of health policy at George Washington University. “So if you add cheaper people to the pool, like immigrants, you reduce the average cost.” More undocumented workers, in other words, means lower premiums for everyone.
The actuarial advantages don’t end there. As it is now, undocumented workers (and others) who can’t pay their way receive free emergency and charitable care—a service that costs those of us with health insurance an additional $1,000 per year, as Obama noted. But if illegals were covered, this hidden tax would decrease, further lowering our premiums and “relieving some of the financial burden on state and local governments,” says Harold Pollack, a University of Chicago professor who specializes in poverty and public health.
What’s more, employers currently have a clear economic incentive to hire undocumented immigrants: they don’t require coverage. A plan that mandates insurance for native workers but not their illegal counterparts actually makes life harder on the blue-collar Americans competing for jobs (and railing against immigrants) because it means that hiring them will cost more than hiring a recent transplant from Mexico City. As The Washington Post‘s Ezra Klein recently explained, “If you’re really worried about the native-born workforce, what you want to do is minimize the differences in labor costs between different types of workers. A health care policy that enlarges those differences—that makes documented workers more expensive compared to undocumented workers—is actually worse for the documented workers.”
I recognize that this is something that will never happen, ever, regardless of if it’s a good idea or not. The second you say “illegal immigrants,” a big portion of the US will only accept deportation, game over, no exception. But it does make you think about the core reasons we’re talking about universal coverage in the first place, namely the inefficiencies of health. There are a handful of free market failures in the economics of health, but the two that come to mind (on the topic of illegals) are insurance markets and externalities. A few words on each:
- Insurance markets: Health insurance markets suffer from adverse selection, which tends to make things all wonky. Basically, people who don’t need health insurance (or who think they won’t in the future), don’t get it. So the people who do have health insurance are the ones more likely to use it, thus it becomes more costly, thus premiums go up. Then, some people who didn’t really need insurance in the first place can’t justify paying that much, so they drop out, leaving just the super unhealthy people. Premiums go up. So on and so forth. Giving everyone coverage, and broadening the umbrella to healthy illegals, reduces the overall risk of the pool and brings down average cost, as Romano noted.
- Externalities: An externality is something whose costs or benefits are not fully felt by the producer. Think the rave down the street whose thumping keeps you up at night or the neighbor who bakes brownies which make the floor smell great. Health definitely suffers from externalities; I can take various measures to keep myself healthy, but if my coworker comes in with H1n1 and coughs on me, there’s not much I can do. So, like it or not, an important step to staying healthy is ensuring that everyone else we interact with is healthy. Compound that with the fact that much of your food (harvested, cleaned, and prepared) passes through the hands of an illegal, and we may want to reconsider helping them stay healthy.
