Insurers have always depended on large numbers of participants to pay into a pool so that those with the highest rates of usage are covered by those with lower rates. In other words, everyone in an insurance pool is interdependent on one another.
In the case of private health insurance, immigrants are often helping shore up the pools to the benefit of the native-born. In fact, roughly half of all immigrants living in the United States have private health insurance coverage—and because they tend to be younger, healthier, and have higher rates of workforce participation than the native-born population, they end up paying more in premiums than they receive in benefits.
A new study published in health policy and research journal Health Affairs highlights the extent to which immigrants help sustain the private health insurance industry upon which so many people (natives and immigrants alike) depend for healthcare.
According to the study, each immigrant with private insurance in 2014 paid annual premiums that, on average, exceeded their care expenditures by $1,123. When you look at all immigrants in the private health insurance market, that translates into an added $24.7 billion for just one year—and $174.4 billion between 2008 to 2014.
In contrast, the cost of care for the native-born in the private insurance market exceeded what they paid in premiums. In 2014, coverage for the native-born population cost on average $163 more per person than the amount they contributed. The study found this is because the native-born are primarily older than immigrants, more likely to have chronic health problems, and less likely to be in the workforce.
In the study’s final analysis, premiums paid by immigrants yielded $10 billion over and above the profits earned by the health insurance industry in 2014. Even though immigrants utilized more heath care services the longer they were in the United States, they still never consumed more in services than they paid in premiums. This means that cutting existing levels of immigration to this country would actually worsen the fiscal condition of the health insurance industry, to the detriment of healthcare for everyone.
As the study notes, this is not the first research to demonstrate that immigrants tend to provide a net financial benefit to the U.S. healthcare system. Researchers found that, in 2009, immigrants made 14.7 percent of Medicare Trust Fund contributions, but accounted for only 7.9 percent of expenditures. This amounted to a net addition of $13.8 billion.
The native-born, on the other hand, used $30.9 billion more than they paid in. Similarly, another study concluded that, from 2000 to 2011, undocumented immigrants alone contributed between $2.2 and $3.8 billion more than they withdrew from Medicare each year. That amounted to an added $35.1 billion over the course of the decade.
With the native-born population growing older and requiring more medical care, immigrants play an important role in shoring up the finances of health insurance companies (not to mention the Medicare system). This works to the benefit of a healthcare system upon which the entire U.S. population depends.
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