Number 7, October 2004



The University of Michigan
555 South Forest Street
Third Floor
Ann Arbor, MI 48104-2531

T 734-936-9842
F 734-998-6341


Q&A with George Borjas, Harvard University

George Borjas, Robert W. Scrivner Professor of Economics and Social Policy at Harvard University’s John F. Kennedy School of Government, focuses his research on the economic impact of immigration. Borjas recently authored a paper, “Welfare Reform, Labor Supply, and Health Insurance in the Immigrant Population,” for ERIU.

Q: Did you expect immigrants to pick up employer-sponsored coverage at the rate they did after welfare reform?

A: I was very surprised because I didn’t expect the labor supply response to be that strong. I thought for sure that disadvantaged immigrants cut off from Medicaid would show up eventually in the uninsured rates. I was truly surprised that it didn’t. One important question that remains for future research is: Is this labor-supply response really a general response we can expect among disadvantaged populations or is it particular to immigrants?

Q: Why did immigrants’ employer-sponsored insurance coverage rates rise in the face of welfare reform and cuts in Medicaid, particularly in states with less generous benefits?

A: It really comes back to the fact that when the threat of getting cut off was enacted through the welfare reform legislation a lot of immigrants went back to work. One could say that maybe this was the late 1990s so that it was a booming economy that attracted a lot of people to work, but in my work I actually try to focus specifically on the impact of welfare reform, adjusting for these economic changes and it is still there. It’s really a very simple story: for immigrants who were potentially cut off from Medicaid, many of them went to work and were able to get health insurance coverage through their jobs.

Q: I can understand the computer programmer from India getting employment with health insurance benefits, but I don’t see the day laborer from Mexico getting such a job with benefits. Who are we talking about as today’s immigrant population? And who comprised the population getting health insurance as welfare was cut back?

A: That’s really a hard question. I didn’t analyze health insurance coverage rates by type of job or occupation so I did not address that issue directly. The fact of the matter remains that a lot of immigrants don’t have health insurance coverage. All we are talking about is was there a shift toward less coverage as a result of welfare reform, and what I’m finding is there wasn’t. That still leaves a pretty sizeable fraction of immigrants still uncovered.

Q: What is the uninsured rate among immigrants?

A: A very large fraction of immigrants are not covered. Only 12 percent of natives are not covered by insurance. For immigrants, it’s 32 percent. Many more immigrants than natives are not covered by health insurance. In my paper, I’m really looking at a change in the trends. You’d expect that if people were cut off from Medicaid the number of uninsured among immigrants should go up a lot. What I’m seeing is it didn’t go up as much as you’d expect, but it’s still very large.

Q: Which immigrants were affected by welfare reform?

A: The welfare reform legislation was specifically targeted to cut assistance to non-refugee, non-citizens. A typical immigrant will come in, say from Mexico. The legal immigrant will have a green card; he has permission to live in the United States permanently. He is not a citizen. It takes at least five years for him to become qualified to become a naturalized U.S. citizen. Welfare reform really only applied to the first five years in the sense that it applies to the non-citizens. Suppose an immigrant becomes a naturalized citizen, he’ll be treated like any other American citizen. We also have two other groups of immigrants. One is the illegal immigrant, who obviously isn’t a citizen and should not be in the program. They clearly are restricted from receiving assistance. The other group, refugees, is basically people who the Congress and the President decide to grant asylum for humanitarian or political reasons. Those people are also exempt from the welfare reform legislation. Welfare reform only really targeted legal immigrants basically from the time they arrive until they become citizens.

Q: Which populations of immigrants or subgroups saw the biggest drops in Medicaid coverage? And which groups experienced the biggest gains in ESI?

A: The ones that saw the biggest drop in coverage were the non-citizens. The other thing I should add is that some states replaced some of the assistance the federal government ended. So non-citizens living in the states that didn’t replace the assistance cut by federal welfare reform were the ones that potentially were most hurt by welfare reform. It is in that group where we saw the largest increase in health insurance coverage from employer sources.

Q: So what should health care policymakers take away from this?

A: It seems to indicate for this particular group of people, while many are uninsured, many immigrants can still find alternative sources when they have to.

Q: How much of the rise in ESI among immigrants, particularly in less generous states, is explained in the fact that the period you look at was mostly a time of unprecedented economic growth?

A: It’s hard to say. I try in my analysis to control for the impact of economic growth in the results. But one can never completely net out the impact of the economic boom that was perhaps particularly strong for immigrants. So it’s quite hard to disentangle how much of it was due to welfare reform effects and how much it could have been due to economic growth. I’ve tried as much as I can to control for the economic growth part so I don’t believe it is a big part of the story, but I cannot conclusively show that.

Q: What do your findings say about Medicaid and public health insurance coverage crowding out private coverage?

A: Most crowd-out studies look specifically at Medicaid. When I looked at the immigrant population, I examined cutbacks in all public assistance, not just in Medicaid. So maybe that’s one reason I’m finding such a strong effect. Plus for immigrants, it wasn’t just Medicaid that was potentially being cut off, it was Medicaid, cash benefits and food stamps. The combination of all these factors, really a complete removal of the safety net in a sense is what motivated many immigrants simply to go and get jobs that brought in the employer health insurance coverage.

Q: What would you suggest Congress take away as they consider welfare reform reauthorization, and state policymakers dealing with budget crises?

A: The big picture with immigration and welfare reform really involves the devolution of power to the states. What happened was that Congress, when it basically cut assistance to immigrants at the federal level, gave states the right to replace that assistance at the state level. And that has really distorted the whole major goal that welfare reform was supposed to have accomplished. If you take my work at face value, it seems to suggest that states that have replaced the programs cut off at the federal level didn’t really have to, if all they wanted to accomplish was to keep the immigrants covered with health insurance. Even the states that didn’t do this, immigrants did just as well.

Q: What are two of the biggest takeaways for healthcare policymakers from your research?

A: The immigrant population has a particular problem with health insurance coverage. Many of them are not covered. Secondly, welfare reform did not work as expected for this population. One would have expected that welfare reform would have led to a pretty sizeable increase in the already very large number of uncovered immigrants and it did not.

Back to top

Funded by The Robert Wood Johnson Foundation, ERIU is a five-year program shedding new light on the causes and consequences of lack of coverage, and the crucial role that health insurance plays in shaping the U.S. labor market. The Foundation does not endorse the findings of this or other independent research projects.