Immigration and health care reform remain controversial issues, and their intersection remains fraught with complexities. Immigration reform that would provide a pathway to legalization for the 11-12 million unauthorized immigrants in the country is stalled in Congress.  Some of the fundamental controversies surrounding the Affordable Care Act (ACA) have, however, been settled, and the law is well into implementation. Now is a good time to focus on how the ACA is affecting and might affect health coverage, costs, and outcomes for various populations, including immigrants.

In addition to federal support for health coverage, the ACA is also ushering in an era of increased state experimentation. The law allows states to open their own insurance marketplaces or participate in the federal marketplace, and with last year’s Supreme Court decision, to decide whether or not to expand Medicaid for low-income childless adults. The law may also open opportunities for states to experiment with coverage options for the one major group excluded from the ACA: unauthorized immigrants.

Unauthorized Immigrants and the Affordable Care Act

ACA excludes the unauthorized from the marketplaces and eligibility for federal subsidies to purchase health insurance. According to the Migration Policy institute, an estimated 7-8 million unauthorized immigrants are currently uninsured, due to low employer coverage and ineligibility for Medicaid and other public programs; the unauthorized represent between one-fifth and one-sixth of the total 40-45 million uninsured. Their uninsurance rate ranges widely from state to state, peaking at over 70 percent in a number of Southeastern and Southwestern states.

The unauthorized are relatively young and healthy. These characteristics suggest they would be relatively cheap to insure, potentially lowering premiums for everyone if they were allowed to participate in the ACA’s exchanges. Evidence to support this theory can be found in the assessment of unauthorized immigrants’ health care use in California, by Pourat, Wallace, Hadler, and Ponce. Their assessment published in the May issue of Health Affairs demonstrates lower preventive, primary, and emergency-room care use by unauthorized immigrants than U.S. citizens or other immigrant groups. Simply put, unauthorized immigrants use less health care than other populations.

But the unauthorized who do get sick or injured—and many work in dangerous jobs—will require health care, as will the population more generally as it ages. Options for their care may be increasingly limited as the ACA slowly retracts federal disproportionate share payments to hospitals for serving the uninsured. At the same time, newly insured patients are expected to flee the federally funded community clinic network—leaving the network fiscally vulnerable. The impact of the unauthorized on the remaining, weak safety net will vary greatly from state to state, as California and Texas respectively account for 25 and 15 percent of the unauthorized who are uninsured.

California’s Health for All Act

Here, an opportunity for a controlled experiment presents itself: California legislators have introduced the Health for All Act that would create a separate marketplace to serve the unauthorized and provide state subsidies for private coverage. Enabling the unauthorized to enter the marketplace and purchase insurance would link a large, young and healthy unauthorized population—numbering nearly 2 million according to our estimates—to California’s insurance pool.

If the legislation passes, California’s experiment would offer a cost-benefit comparison between including and excluding the unauthorized from the ACA. California would certainly bear substantial costs in establishing the marketplace and subsidizing unauthorized immigrants’ coverage. But including the unauthorized could lower premiums for everyone else. If California’s health care costs fall faster or rise more slowly than costs in the rest of the U.S., California’s experiences could offer important lessons for other states. Trends in California’s emergency room and safety-net provider use, cost, and financial health could also be compared to other states.

California will not be the only state experimenting with health care options for uninsured immigrants. Like California’s proposed law, states with smaller unauthorized populations may provide state subsidies or expand Medicaid coverage. Or they may develop alternative insurance pools or basic health plans. Some states (and localities) that do not expand eligibility or provide subsidies may develop creative ways to sustain care for unauthorized and other immigrants as resources become increasingly limited.

Coverage for Immigrant Children

State-level eligibility expansions for immigrants can have rapid and substantial effects on their health coverage and health care access. We can look, for example, to a 2009 federal law that enabled states to restore Medicaid and Children’s Health Insurance (CHIP) eligibility to legal immigrant children with less than five years of U.S. residency—a group that had been excluded from federally funded coverage since 1996. But states had to make this restoration affirmatively through legislation or executive order.

In another May Health Affairs article, Saloner, Koyawala, and Kenney explain that, as the 2009 law took effect, insurance coverage of immigrant children rose 25 percent in the 20 states that restored Medicaid and CHIP when compared with states that did not. Additionally, children in the restoration states experienced a drop in unmet health needs. By reducing children’s unmet health needs, the Medicaid/CHIP restoration in these states may have also reduced the long-term health care costs for these children.

States such as California that have embraced the ACA and its Medicaid expansion are by-and-large the same states that have taken the option to restore Medicaid and CHIP or have otherwise extended coverage to immigrant populations. (Texas is an important exception, as it took the option to restore Medicaid/CHIP to immigrant children but not the ACA option to extend Medicaid to childless adults.) The expansion states also tend to be those with higher employer coverage.

These two research articles demonstrate the potential of ACA and Medicaid coverage expansions for improving immigrants’ access to health care and holding the line on health care costs across the country. But the research also suggests that state-by-state differences in immigrants’ coverage, costs, and outcomes may persist or even widen in the near term. Measuring how coverage, costs, and outcomes vary among states taking different options will provide useful data for future health care policy decisions.