How Taxpayers Finance Health Care for Unauthorized Immigrants


How much do you spend each year to pay for healthcare for unauthorized immigrants? (“Unauthorized immigrants” is the Department of Homeland Security’s politically correct term for illegal immigration.)

Most people would probably answer zero! There’s no such category in your family budget and you’re probably aware that Medicaid, Medicare, and ObamaCare all expressly prohibit coverage for illegal immigrants.

Taxpayer Support

Chris Conover, healthcare economist at Duke University, estimates American citizens finance $18.5 billion in healthcare treatment for this population through various tax-payer funded programs. Here’s a breakdown of that number:

  • $4.6 Billion paid by federal taxes
  • $2.8 billion paid by state and local taxes
  • $3.0 billion paid by “cost-shifting” by hospitals
  • $1.5 billion paid by physicians’ charity care
  • $0.9 billion paid by federal tax exemptions for non-profit hospitals
  • $5.7 billion paid by the employer tax exclusion

Of that total, federal taxpayers provided $11.2 billion in subsidized care in 2016.

Aren’t these unauthorized immigrants excluded from healthcare coverage?

Here is a summary of how federal tax dollars can be used for healthcare treatment of unauthorized immigrants:

Where Use of Federal Dollars to Fund Health Care for Unauthorized Immigrants is Expressly Prohibited

Medicaid – Medicaid and CHIP (Children’s Health Insurance Program) both exclude any federal funding to cover unauthorized immigrants, except for payment for limited emergency services. Medicaid does allow coverage for individuals who would be eligible “except for their immigration status.”

States, however, can and do use state-only Medicaid programs to cover such individuals. California is the prime example of this practice. California’s Health for All Kids Act provides unauthorized immigrant children with access to coverage through Medi-Cal, the state Medicaid program. This is the largest state program that provides coverage for all children regardless of immigration status. Other blue states that participate in such programs include New York, Illinois, Massachusetts, Washington, and the District of Columbia.

ObamaCare – Under the ACA, immigrants must be lawfully present to purchase a Qualified Health Plan, or to be eligible for an Advance Payment for Premium Tax Credit or Cost-Sharing Reduction. California’s Governor Jerry Brown applied for a federal waiver to allow the state to offer unauthorized immigrants to purchase health plans on its ObamaCare exchange, but withdrew his request on January 18, 2017.

Where Use of Federal Dollars to Fund Health Care for Unauthorized Immigrants is Indirectly Permitted

There are several “end-arounds” that allow health care for unauthorized immigrants to be indirectly funded using federal dollars.

Medicaid DSH Payments

DSH payments, or “disproportionate share hospitals”, are hospitals that serve a large number of Medicaid and low-income uninsured patients. These payments are limited to 100% of the costs incurred. These payments do not discriminate between unauthorized and authorized immigrants, or even consider immigration status at all. Therefore Medicaid dollars indirectly subsidize care for unauthorized immigrants.

Medicare DSH Payments

The same is true for Medicare. No distinction is made for immigration status. Medicare, therefore, subsidizes unauthorized immigrant care.

Community Health Centers

Federally qualified community health centers provide primary care for medical, dental, mental health and pharmacy services. There is no consideration for immigration status or ability to pay for care.

Tax Exemption

Non-profit hospitals and other health facilities receive tens of billions of dollars in benefits from federal tax exemptions including income taxes, public charitable contributions, and the value of tax-exempt bond financing. Unauthorized immigrants benefit from this federal largesse.

Employer Tax Exclusion

The tax exclusion enjoyed by all employers for providing employee healthcare insurance applies to any unauthorized immigrant employed by the company.

Next post we’ll discuss the pros and cons of such federal taxpayer assistance in providing healthcare for unauthorized immigrants.

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