The White House Tacks Right On Illegal Immigrants In Health Care Reform

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[Updated below]

Little noticed amid all the hubbub over Rep. Joe Wilson’s “You Lie!” screech last week was the decision by Obama’s senior advisers to plant the White House to the right of both House and Senate Democrats on the issue of illegal immigration in the health care reform bill. To understand how, one must get a bit in the weeds of the policy debate.

In his speech last Wednesday, Obama announced that “the reforms I am proposing would not apply to those who are here illegally.” To this, Wilson screamed that Obama was lying. Most reporters and fact checkers, including me, determined that it was Wilson who was wrong. That’s because both the House and Senate bills, as laid out last week, included language explicitly banning federal insurance subsidies from going to illegal immigrants.

Republicans like Wilson, however, say those bans are not enough, for two broad reasons–enforcement and indirect subsidies.

As for the first issue, they worry that there will not be clear enforcement mechanisms to prevent illegals from violating the law and getting away with it. In response, lead health reform negotiator, Max Baucus, the Montana Democrat, has subsequently announced that social security numbers, or a documentary equivilent, may be required to get the subsidies. Some Republicans are still not satisfied, but most observers say there is little risk anyway of illegal immigrants trying to join the program in any large number.

The second objection, indirect subsidies, involves the health care exchange. The exchange will be established by the government, but it will function like a private store, primarily offering insurance products from the private sector to individuals who have trouble getting insurance, and others who cannot afford insurance. (Liberals in Congress, and the president, hope that the exchange will also offer a “public option,” which will be a government run health plan sustained by paying customers, though the likelihood of that plan passing the Senate is in serious doubt. The exchange might also offer “co-op” plans, which would be private non-profit companies established with public assistance.) The federal subsidies I mentioned above are designed to be spent in the exchange. Qualifying citizens would be allowed to enter the exchange, pick an insurance product that meets certain benchmarks, and then have the federal government pay part of the tab. Non-citizens would not qualify for the subsidies.

But would illegal immigrants be able to purchase insurance on the exchange with their own money? This is where the White House has diverged from the House Democrats’ bill and from the early framework of the Senate Finance Committee. The House bill and the Senate framework from last week were silent on the question of whether or not illegal immigrants could spend their own money in the exchange. (Admittedly, this is a largely hypothetical dilemma, since there are not a large number of illegal immigrants who are likely to use this option.) But last week, the White House took a stand on exactly this question, issuing this statement:

Under President Obama’s plan, undocumented immigrants would not be allowed to enter the exchange. People who are lawfully present in this country would be able to participate in the exchange.

Though the political reasons for taking this position are not in doubt, the White House stand does present a potential policy irony. The purpose of the exchange, and health care reform as a whole, is to decrease the number of people who avoid insurance and choose instead to get health care in hospital emergency rooms, a cost that is eventually picked up by the local, state and federal government. By frustrating the opportunities for illegal immigrants to purchase insurance with their own money, the White House position suggests that those here illegally could continue to cost public money by using emergency rooms. In other words, by banning illegal immigrants from paying their own way on the exchange, it is possible that the taxpayer cost of health care for illegal immigrants would be higher, not lower. Though the signs from the Senate are a bit mixed, the Finance Committee is likely to adopt Obama’s no-exchange standard.

There is another argument, which has been made in some corners, by opponents of the President’s plan: Illegal immigrants will benefit from the insurance reform components of the health care overhaul. Under the current bills, for instance, insurance companies would be forced to stop dropping people from coverage, or barring people from signing up for new coverage, because of pre-existing conditions. These reforms would apply even in the non-exchange private insurance market, where no law bars illegal immigrants from buying coverage. But then this argument could be applied to almost any sort of regulation by the federal government. There is, after all, no way to prevent illegal immigrants from benefiting from broad policies, like regulations reducing the amount of lead in children’s toys or the amount of  air pollution.

UPDATE: Rep. Luis Gutierrez, an Illinois Democrat, blasted Obama Monday, in Spanish, for his decision to bar illegal immigrants from entering the health insurance exchange to use their own money. ABC News has this report:

Referring to the Obama Administration, Gutierrez said: “Those who should be our friends, our allies, are more and more giving Rep. (Joe) Wilson, R-S.C., exactly what he wants to continue with this prejudice against our community.”. . .

She continued:

“What is the administration’s answer [to Wilson]?” asked Gutierrez. “To give him exactly what he said from his hatred. . . “