California Considers Taxpayer-Funded Health Care for Illegal Immigrants

Published October 24, 2018

Touting the universal health care model he introduced as mayor of San Francisco, Newsom says if he’s elected he will expand California’s Medicaid program, known as Medi-Cal, to cover illegal immigrants.

Benefits Magnet

Sally Pipes, president and CEO of the Pacific Research Institute, says Newsom’s proposal to expand Medi-Cal would make California a benefits magnet, further straining the state’s already beleaguered financial resources. Newsom’s proposal would draw more illegal immigrants to California, and as taxpayers vote with their feet by moving out, there will be fewer taxpayers to cover the skyrocketing health care costs, Pipes says.

“[Newsom’s plan] means more and more illegal immigrants will come to California, which would put incredible additional pressure on California’s budget,” Pipes said. “Those budget problems are already making people move to other states. [Economist] Art Laffer moved to Nashville, Tennessee. Andrew Puzder, former CEO of Hardees and Carl’s Jr., also moved to Tennessee. Toyota moved out of Torrance, California.

“More and more companies will move out of state, putting more and more pressure on the people who remain to pay for all these programs,” Pipes said. “If you provide free education, health care, and welfare, it will attract more and more [nonworking] people to California.”

Each new “free” service government offers causes taxes to rise for everybody, Pipes says.

“Corporations don’t pay taxes; people pay taxes,” Pipes said. “And that means the best, brightest, and most productive, entrepreneurial people will leave the State of California, increasing the deficit that taxpayers have to pay,” said Pipes.

Expects Doctor Shortages

Pipes predicts a plethora of doctors will retire early or leave the state as provider payments are cut.

“Obamacare has already led many doctors to retire early because of the reduced payment rate they get,” Pipes said. “There will be an even greater shortage of doctors because doctors are not going to want to treat patients who are on Medi-Cal, since they’d get paid about 40 percent below what they would get treating people with private insurance.”

Pipes says there will be dire consequences if the nation adopts Sen. Bernie Sanders’ (I-VT) Medicare for All plan, a national version of Newsom’s proposed single-payer scheme.

“The California Senate passed [a] universal health care bill on June 1, 2017, that was not passed by the Assembly,” Pipes said. “The cost estimate coming out of the California Senate Appropriations Committee was $400 billion per year—double the entire state budget of California.

“I call Bernie Sanders the ‘pied piper’ of health care, who wants single-payer Medicare for All, yet you can’t get him to admit to the American people who is actually going to pay for it, or how much it’s going to cost,” Pipes said. “The fact is that if Medicare for All is implemented, just as in Canada, Americans will endure long waiting lists for care, will experience rationed care, and will see a shortage of medical practitioners.”

Core Problems Remain

Matt O’Brien, director of research at the Federation for American Immigration Reform, says universal single-payer schemes do nothing to address the real cause of our health care problems: The current insurance-based system encouraged by government suppresses market forces that keep costs low.

“This is part of a bigger problem in the whole way we deliver medical care in this country,” O’Brien said. “There’s no market to establish what the prices should actually be. Nobody really knows what anything actually costs, because nobody has had to compete for customers in ages. The insurance companies artificially depress [prices of] some things and artificially raise the prices of other things.

“When you stop to think about it, we have a system for paying for medical care where, if I’m a person who has virtually no income and I need surgery, you send me a bill for $42,000, but if I’m a person with a $200,000 per year income, and my insurance company has a contract with the surgeon that he will do it for $3,000, he gets paid $3,000,” O’Brien said. “Nobody attempts to negotiate a lower price with the person who didn’t have the insurance coverage.”

Unsustainable Drain on Resources

O’Brien says mixing a single-payer model and with a rising illegal immigrant population would create a perfect storm of rapidly increasing costs.

“You have two things colliding here,” O’Brien said. “One is a crazy immigration policy. For too long, too many successive presidential administrations have decided to selectively enforce immigration to curry favor with perceived constituencies. You have that clashing with a medical system that doesn’t have any rational relationship to the market and has largely been manipulated by big hospital corporations and insurance corporations in order to ensure that certain parts of the medical system generate huge profits, when there hasn’t been any free market competition in the medical marketplace for ages.”

‘Exploited As Cheap Labor’

Expansion of “free” health care, combined with mass immigration, amounts to exploitation of lower-income workers, O’Brien says.

“Really, what this whole issue points out is you’re putting people in a position where they’re being exploited as cheap labor,” O’Brien said. “And in the process, they’re undermining the wage structure upon which the most vulnerable Americans working either entry-level or low-skill/low-wage jobs depend.

“When you start pumping government money into your economy to provide those kinds of benefits, what you’re basically doing is subsidizing businesses that should be competing for labor in an open market, and you’re allowing those same companies to pay people lower wages, because their insurance is picked up by the state,” O’Brien said.