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QUALCOMM, Inc. (QCOM), Cisco Systems, Inc. (CSCO): Immigration Reform’s Big Impact on Health Care

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Congress has a hot topic on its hands this summer. A proposed immigration reform bill is making its way through the halls of Capitol Hill. While lawmakers argue the pros and cons of the legislation on immigration, the bill also would make a major impact on health care in the U.S.

QUALCOMM, Inc. (NASDAQ:QCOM)

More spending
According to the Congressional Budget Office, around 8 million unauthorized residents would gain legal status and 10.4 million additional residents would be added to the U.S. by 2023. The CBO says that federal spending will increase by $262 billion over the next decade due largely to refundable tax credits and higher health care spending.

That higher health care spending goes primarily to two areas: Obamacare and Medicaid (including the Children’s Health Insurance Program, or CHIP). Additional spending on Obamacare health insurance exchange subsidies will amount to $82.3 billion through 2023, according to the CBO, with another $5 billion hit from lower revenue. Medicaid and CHIP will require $29.3 billion added spending during the same period with the proposed immigration reform.

Medicare spending would only increase by $0.8 billion, but this highlights a larger issue. The CBO only scores the budgetary impact for the first 10 years. Most unauthorized immigrants wouldn’t qualify for Medicare until many years from now — well beyond the CBO’s cost calculation time frame.

The CBO did take a stab at going out further in time, with projected increased health care spending of around $470 billion in the 10-year period ending in 2033. However, according to the Center for Immigration Studies, the average age of unauthorized immigrants was around 42 in 2010. Newly incoming immigrants tend to be much younger, with an average age of less than 30. This means that even estimating through 2033 doesn’t give a good picture of the ultimate health care costs for the proposed bill.

We should note that the CBO expects increased revenue will exceed the higher costs incurred. Through 2023, around $459 billion of higher revenue is expected resulting from additional taxes paid by legalized residents and new immigrants. These higher taxes assume higher employment levels, according to the CBO, “because the larger population would boost demand for goods and services and, in turn, the demand for labor.”

More doctors
One clearly positive impact from the proposed immigration bill would be in enabling more physicians to remain in the U.S. In particular, non-resident physicians who work in areas that have a shortage of health care professionals or at Veterans Administration hospitals will have an easier path to staying in the U.S. with the current immigration reform legislation.

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