Immigrants and the Cost of Medical Care

Published In: Health Affairs, v. 25, no. 6, Nov./Dec. 2006, p. 1700-1711

Posted on RAND.org on December 31, 2005

by Dana P. Goldman, James P. Smith, Neeraj Sood

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Foreign-born adults in Los Angeles County, California, constituted 45 percent of the county's population ages 18–64 but accounted for 33 percent of health spending in 2000. Similarly, the undocumented constituted 12 percent of the nonelderly adult population but accounted for only 6 percent of spending. Extrapolating to the nation, total spending by the undocumented is $6.4 billion, of which only 17 percent ($1.1 billion) is paid for by public sources. The foreign-born (especially the undocumented) use disproportionately fewer medical services and contribute less to health care costs in relation to their population share, likely because of their better relative health and lack of health insurance. Immigrants use disproportionately less medical care than their representation in the U.S. population would indicate. Several salient dimensions of the "medical cost crisis" have received much attention, but one neglected topic involves the role of immigrants in shaping levels and trends in the costs of providing medical care. Notable research demonstrated lower medical care use among undocumented Latinos; however, it did not estimate the comparative medical costs of all types of immigrants. Similarly, other research has documented lower per capita health spending by the foreign-born but was unable to distinguish among the foreign-born by their naturalization or legal status. The relative absence of reliable cost numbers partly reflects the strong emotion surrounding immigration throughout U.S. history. Emotional pleas by advocates on both sides of the immigration divide are given especially free rein when scientific evidence is incomplete. Immigrants are a rapidly growing part of the population. According to the 2000 census, there were thirty-two million foreign-born people living in the United States—one in nine of the total U.S. population. Estimates indicate that the U.S. population will add 120 million people by 2050, 80 million of whom are or will be here as the direct or indirect consequence of immigration. An equally dramatic trend is the rapidly changing fraction of undocumented immigrants. Among immigrants in the United States for less than five years in 2002, almost half were undocumented. In 1970 the figure was less than 5 percent. Rival concerns have been raised about the costs of providing health care to immigrants—especially those who are here illegally. The relative unavailability of health insurance raises concerns about long-term health effects if immigrants do not obtain needed medical care. But the costs of providing health care to immigrants could be large, especially where they are heavily concentrated. Los Angeles County is the largest such community in the country. We employed novel data on health status and use of services, place of birth, and legal status of a representative sample of residents of Los Angeles County in 2000. These data allowed us to estimate service use and costs of care for nonelderly adults by nativity and type of immigrant, including the undocumented. Because of a dearth of objective cost estimates for the foreign-born, we also extrapolated our results to the entire United States. Although our cost estimates are by no means insignificant in absolute terms, the expense of providing medical care to the foreign-born—especially the public-sector cost—is much less than their population representation. This gap is largest for the undocumented.

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