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I recently did an interesting interview with Dan Gorenstein, a health care reporter with station WHYY and NPR's radio business show Marketplace on the issue of tax-financed health care for unauthorized immigrants [1]. The piece that aired did not include any of my remarks, but I thought it would be useful to give readers my perspective on this knotty policy question based on both background research I did to prepare for the interview and follow-on research I did in light of the questions posed in the interview.

Current federal policy is to prohibit federal tax funding of health care to unauthorized immigrants through either Medicaid or Obamacare. Nevertheless, rough estimates suggest that the nation's 3.9 million uninsured immigrants who are unauthorized likely receive about $4.6 billion in health services paid for by federal taxes, $2.8 billion in health services financed by state and local taxpayers, another $3.0 bankrolled through "cost-shifting" i.e., higher payments by insured patients to cover hospital uncompensated care losses, and roughly $1.5 billion in physician charity care. In addition to these amounts, unauthorized immigrants likely benefit from at least $0.9 billion in implicit federal subsidies due to the tax exemption for nonprofit hospitals and another $5.7 billion in tax expenditures from the employer tax exclusion.

All told, Americans cross-subsidize health care for unauthorized immigrants to the tune of $18.5 billion a year . Of this total, federal taxpayers provided $11.2 billion in subsidized care to unauthorized immigrants in 2016  .

In this post, I describe in more detail current policy, current sources of funding for health care of unauthorized immigrants. In a follow-on post, I will offer four independent reasons federal tax funding for such care is a bad idea (that is, a reader need only accept one, not all, in order to conclude we should dispense with such funding).

 

A map of Mexico purporting to show the country as it was in 1794 is displayed as young immigrants and their supporters rally in support of Deferred Action for Childhood Arrivals [DACA) in Los Angeles, California on September 1, 2017. A decision is expected in coming days on whether US President Trump will end the program by his predecessor, former President Obama, on DACA which has protected some 800,000 undocumented immigrants, also known as Dreamers, since 2012. / AFP PHOTO / FREDERIC J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)

A map of Mexico purporting to show the country as it was in 1794 is displayed as young immigrants and their supporters rally in support of Deferred Action for Childhood Arrivals (DACA) in Los Angeles, California on September 1, 2017. A decision is expected in coming days on whether US President Trump will end the program by his predecessor, former President Obama, on DACA which has protected some 800,000 undocumented immigrants, also known as Dreamers, since 2012. / AFP PHOTO / FREDERIC J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)

Current Policy Regarding Federal Funding of Health Care for Undocumented Immigrants

The purported intent of federal policy is to prevent federal tax dollars from being used to fund health care for unauthorized immigrants except in extreme circumstances. Notwithstanding express prohibitions contained in the statutes related to Medicaid and Obamacare, there also are companion federal programs that permit federal funding to be used for health care of unauthorized immigrants indirectly.

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

Medicaid. Under Medicaid and CHIP (Children's Health Insurance Program), no federal funding may be used to cover unauthorized immigrants, except for payment for limited emergency services. Specifically, "Medicaid payments for emergency services may be made on behalf of individuals who are otherwise eligible for Medicaid but for their immigration status. These payments cover costs for emergency care for lawfully present immigrants who remain ineligible for Medicaid as well as undocumented immigrants."

Moreever, states can and do use state-only Medicaid programs to cover such individuals. For example, California's Health for All Kids Act provides unauthorized immigrant children with access to coverage through Medi-Cal, the state Medicaid program. Its passage in 2015 made California the largest state to use state-only funding to provide coverage to all children regardless of immigration status; in doing so, it joins New York, Illinois, Massachusetts, Washington, and the District of Columbia. 

ACA. Under the ACA, immigrants must be lawfully present to purchase insurance in a Qualified Health Plan, or to be eligible for an Advance Payment for Premium Tax Credit or Cost-Sharing Reduction. Under legislation signedby Governor Jerry Brown in June 2016, California would have been the first state to allow unauthorized immigrants to purchase health plans through its insurance exchange without fear that their information would be shared with other government agencies. The law directed California’s exchange, Covered California, to apply for a State Innovation Waiver to allow people who would be eligible for the exchange if not for their immigration status to purchase California Qualified Health Plans (QHPs), which provide benefits identical to those included in other ACA-compliant QHPs. This policy requires a waiver because it involves an alteration to the original terms of the ACA, which bars the participation of unauthorized immigrants in state exchanges. However, this waiver request was withdrawn on January 18, 2017.

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

The "clear intent" of restrictions embedded in Medicaid and Obamacare is undercut by several end-arounds that allow health care for unauthorizedimmigrants to be indirectly funded using federal dollars.

Medicaid DSH Payments. First, there is a source of Medicaid financing that indirectly benefits unauthorized immigrants: DSH payments [2]. Kaiser Family Foundation reports "DSH, or “disproportionate share” hospitals are hospitals that serve a large number of Medicaid and low-income uninsured patients...At the facility level, Medicaid DSH payments are limited to 100 percent of the costs incurred for serving Medicaid and uninsured patients that have not been compensated by Medicaid (Medicaid shortfall)." The DSH program simply provides a general subsidy against a hospital's aggregate uncompensated care losses from uninsured patients.  Nothing requires hospitals to back out their spending on uncompensated care for unauthorized immigrants from their aggregate losses; consequently, federal Medicaid funds end up indirectly subsidizing their care even though it would be expressly illegal to pay for their care by making them direct Medicaid recipients. 

Medicare DSH Payments. In a similar fashion, although the formula is much more complicated, Medicare also pays hospitals a DSH payment that effectively serves as a general subsidy to offset aggregate uncompensated care losses without making any distinction between uncompensated costs generated by unauthorized immigrants and those generated by American citizens or legal immigrants.

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https://www.forbes.com/sites/t...grants/#baa735612c47

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