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Considerable attention has focused in recent months on the participation of legal immigrants in the welfare system. One result has been a number of proposals to end or restrict their eligibility for the major means-tested federal entitlement programs. At the request of Congressman Harold Ford when he was Chairman of the Subcommittee on Human Resources of the Committee on Ways and Means, this paper examines the participation of noncitizens in the Food Stamp program, Aid to Families with Dependent Children, Supplemental Security Income, and Medicaid, and analyzes options for limiting their eligibility for these programs. In accordance with the Congressional Budget Office's (CBO's) mandate to provide objective and impartial analysis, the paper contains no recommendations.

Daniel M. Mont of CBO's Health and Human Resources Division prepared this paper under the direction of Nancy M. Gordon and Ralph E. Smith. The estimates of the budgetary impacts of the proposals were prepared by Jean Hearne, Julia Isaacs, Robin Rudowitz, Kathy Ruffing, and John Tapogna of CBO's Budget Analysis Division, under the direction of Paul N. Van de Water and Paul R. Cullinan.

CBO gratefully acknowledges the cooperation and assistance of Larry Eig and Joyce Vialet of the Congressional Research Service. Within CBO, valuable comments were offered by Harriet Komisar, Jay Noell, Janice Peskin, and Bruce Vavrichek. Susan Labovich and Meg Shaw provided computer assistance, and Julia Jacobsen and Sharon Corbin-Jallow prepared the figures. Leah Mazade edited the manuscript, and Ronald Moore prepared the paper for publication.
 

Robert D. Reischauer
Director
February 1995
 
 

SUMMARY

CHAPTER I - IMMIGRATION AND IMMIGRANTS

• Legal and Illegal Residents
• Legal Permanent Residents
• Permanently Residing Under Color of Law

CHAPTER II - ELIGIBILITY OF LEGAL IMMIGRANTS FOR WELFARE PROGRAMS

• Food Stamps
• Aid to Families with Dependent Children
• Supplemental Security Income
• Medicaid
• Other Welfare Programs

CHAPTER III - PARTICIPATION OF LEGAL IMMIGRANTS IN WELFARE PROGRAMS

• Food Stamps
• Aid to Families with Dependent Children
• Supplemental Security Income
• Medicaid

CHAPTER IV - LIMITING LEGAL IMMIGRANTS' ELIGIBILITY FOR WELFARE PROGRAMS

• Proposals that Deny Legal Immigrants Eligibility for Most Welfare Programs
• Proposals that Restrict the Eligibility of Legal Immigrants for Welfare Programs
• Effects on State and Local Spending of Eliminating or Restricting Eligibility

A number of current proposals dealing with welfare reform would restrict or eliminate the eligibility of legal immigrants for welfare programs. This paper furnishes some background information on such immigrants and their participation in welfare programs. It also examines various aspects of those proposals and reviews arguments for and against their adoption.
 

IMMIGRATION AND IMMIGRANTS

Hundreds of thousands of legal immigrants enter the United States every year. About 9 million to 10 million of those living in this country are classified as legal permanent residents. Others enter the country as refugees or are granted asylum after they arrive here, and some fall into a variety of legal classifications that, along with refugees and asylees, are known as persons residing under color of law (PRUCOL). In addition, approximately 3 million aliens live here illegally.

Immigration is subject to many laws and regulations, which include limits on the number of certain types of immigrants who are allowed to enter the United States and their qualifications for entry. The majority of new immigrants obtain visas for entrance on the basis of family ties with citizens or other legal immigrants. Most of the others who enter qualify on the basis of their employment--that is, they have a particularly valuable skill or profession.

An application for immigration can be rejected if an immigrant is considered likely to become a public charge at any time after arriving in the United States. In fact, about 11 percent of visa applications are denied because potential immigrants cannot prove that they would not be public charges. Immigrants must demonstrate that they have the resources, skills, or prearranged employment necessary to support themselves. If they cannot do so, they can still immigrate if a sponsor in the United States signs an affidavit of support pledging to assist them and proving that the sponsor is capable of such assistance. (Those immigrants are referred to here as sponsored immigrants.)

Immigrants who become legal permanent residents can usually become citizens after living for five years in the United States. With some exceptions, they must pass a civics and English proficiency test, after which they obtain the rights and privileges of natural-born citizens.
 

ELIGIBILITY OF IMMIGRANTS FOR WELFARE PROGRAMS

Most legal immigrants who otherwise qualify are eligible for food stamps, Aid to Families with Dependent Children (AFDC), Supplemental Security Income (SSI), and Medicaid--the four major welfare programs that accounted for about 85 percent of total federal spending on means-tested entitlement programs in 1994. (Means-tested programs distribute benefits only to recipients who first satisfy an income and asset requirement.) Restrictions keep many PRUCOL aliens from receiving food stamps, but otherwise the eligibility requirements are basically the same for citizens and legal immigrants. Illegal aliens and legal nonimmigrants (mostly tourists, students, or businesspeople in the United States temporarily) are eligible only for emergency medical assistance under Medicaid.

Sponsored immigrants have an added requirement, known as deeming, to be eligible for welfare programs. The deeming procedure is generally similar for all four programs--namely, a sponsor's income and resources must be included in the test for eligibility for three years after a person immigrates. However, the deeming period for SSI has been temporarily increased to five years, and it is waived if a disability qualifying an immigrant for recipiency began after arrival in the United States. For Medicaid, the requirement is the same for legal immigrants as for citizens: the only people whose income and resources are used in determining eligibility are the immigrant's spouse or parent (for those under age 21).
 

PARTICIPATION OF LEGAL IMMIGRANTS IN WELFARE PROGRAMS

The percentage of legal immigrants who receive welfare benefits varies depending on which program or subset of immigrants is being examined. Furthermore, the percentage of individual immigrants receiving welfare benefits is different from the percentage of households or families--with at least one member who is a legal immigrant--receiving benefits. In addition, in trying to assess trends in participation in welfare programs, the effects of the Immigration Reform and Control Act of 1986 (IRCA) must be considered. (IRCA allowed many previously illegal aliens to become legal permanent residents after satisfying certain requirements.)

The percentage of food stamp and AFDC recipients who are legal immigrants is similar to the percentage of all people residing in the United States who are not citizens--between 4 percent and 5 percent. About 1.2 million legal immigrants received food stamps each month in 1992, and approximately 620,000 legal immigrants received AFDC during the same period. The percentage of families receiving AFDC or of households receiving food stamps with at least one member who is not a citizen is higher--roughly 10 percent for each program.

The percentage of SSI recipients who are legal immigrants is significantly higher--approximately 12 percent of the nearly 6 million SSI recipients in 1993. Those noncitizens were disproportionately concentrated in the SSI program for the aged, as opposed to the program for the blind and disabled. About 29 percent of the aged recipients--and more than 60 percent of aged recipients not qualifying for Social Security benefits--were legal immigrants. Elderly immigrants generally do not have the work experience necessary to qualify for Social Security and thus have lower incomes and are more likely to qualify for SSI. Those circumstances, combined with the fact that Social Security recipients receive lower SSI benefits on average even when they do qualify, resulted in more than 45 percent of all SSI payments under the aged program going to legal immigrants in August 1994.

The percentage of SSI recipients who are legal immigrants has been growing, a trend that is expected to continue. Applications by immigrants have increased from about 60,000 a year in the early 1980s to more than 160,000 a year in 1993. As those applicants are approved for benefits and enter the SSI program, the total number of recipients will increase.

The recipiency rate for legal immigrants in the Medicaid program is about 6.5 percent of all Medicaid recipients. In 1996, an estimated 2.4 million Medicaid recipients will be legal immigrants.
 

LIMITING LEGAL IMMIGRANTS' ELIGIBILITY FOR WELFARE PROGRAMS

A variety of reform proposals that have appeared recently are aimed at restricting or eliminating the eligibility of legal immigrants for welfare. They range from denial of welfare benefits for certain categories of immigrants to more limited proposals that would typically expand requirements for the sponsors of immigrants.

Denying Legal Immigrants Eligibility for Welfare Programs

One of the proposals would eliminate eligibility for welfare benefits other than emergency medical assistance for most legal immigrants. The exceptions would be refugees and legal permanent residents who were age 75 or older and had lived in the United States for at least five years. The Congressional Budget Office (CBO) estimates that this option would reduce federal outlays by $23.3 billion over the 1997-2000 period. (Savings would be minimal in 1996 because the January 1995 version of H.R. 4, which would deny eligibility for welfare programs to most legal immigrants, would not apply to the eligibility of a noncitizen until one year after the date of its enactment--provided that the noncitizen was residing in the United States and eligible for benefits on that date.)

One reason for cutting back immigrants' eligibility that is given by proponents of reform is that immigrants who choose not to become citizens after residing in this country for the required number of years are making a statement about their level of commitment to the United States. Therefore, such proponents claim that it would be appropriate to deny those immigrants the full benefits enjoyed by citizens. Critics of that argument point out that legal immigrants are treated like citizens when they are required to contribute to the public interest. For example, immigrants who have not become naturalized citizens must still pay taxes, and those men who are of an appropriate age must register with the Selective Service. Therefore, such critics maintain that legal immigrants should also receive the benefits accorded citizens.

Concern about a lack of commitment to the United States may be more relevant for SSI eligibility than for eligibility for AFDC or the Food Stamp program. Most legal immigrants who receive SSI benefits entered the United States when they were age 60 or older and are thus less likely than the typical recipient of food stamps or AFDC (who tends to be younger) to have paid taxes or contributed to the nation's economy. Similarly, elderly immigrants are not called upon to serve in the armed forces.

Other reasons given in support of this proposal are that sponsored immigrants should be the responsibility of their sponsors, not the general public; reliance on public assistance programs undermines the incentive for new immigrants to integrate themselves into the nation's economy; and this approach might deter low-skilled immigrants of working age from coming to the United States and competing directly for jobs with economically disadvantaged citizens.

Opponents of these measures, aside from denying the proponents' claims, offer two arguments against restricting eligibility. First, they are concerned about the social well-being of immigrants and their children, many of whom will become citizens when the five-year waiting period ends. Second, eliminating federal benefits could create more applicants to welfare programs supported by the states. In essence, the savings at the federal level could be at least partly translated into state expenditures. Some proposals attempt to address that possibility, but there are some questions about their constitutionality.

Restricting Legal Immigrants' Eligibility for Welfare Programs

Other proposals would restrict rather than eliminate the eligibility of sponsored immigrants by increasing the deeming period for all welfare programs to five years or until an immigrant obtains citizenship. A measure that falls between those two approaches calls for increasing deeming periods to five years for all sponsored immigrants but, in addition, increasing them until citizenship is obtained for immigrants with sponsors whose income exceeds the national median. These proposals have much smaller savings than the proposal to eliminate eligibility for most benefits.

Finally, another approach would make a sponsor's affidavit of support a legally binding document. Under current law, if sponsors renege on their agreements, neither the immigrant nor the government can take legal action. Although such an option would send a signal about a sponsor's responsibility, it might not generate significant savings because of the difficulty and cost of enforcing it.

Effects on State and Local Spending

Denying or restricting legal immigrants' eligibility for federal welfare programs would affect spending by states and localities, but the magnitude of the effect could vary significantly from state to state, and some states might even spend less than they do under current law. The net impact would depend on the existence and nature of state and local general assistance (GA) programs, state supplements to SSI, state and local shares of AFDC and Medicaid expenditures, and the economic and demographic characteristics of states' populations of legal immigrants. Spending for GA and general medical assistance (GMA) programs would increase, but state and local spending for AFDC, Medicaid, and state supplemental payments for the SSI program would decrease.

The impact of the various proposals on local governments could be more severe than their impact on the states. Legal immigrants who were removed from Medicaid would presumably show up at locally funded public hospitals for both emergency and nonemergency treatment. Those immigrants would probably also seek services at community health centers and migrant health centers, which would no longer be able to use federal funds to treat immigrants. Those facilities would, therefore, have higher unreimbursed costs.

Some proposals have included measures that would allow states and localities to restrict the eligibility of noncitizens for their welfare programs, thus minimizing the potential for costs to be shifted to them. Although questions have arisen about the constitutionality of those measures, states and localities could certainly curtail their GA and GMA programs for all residents, thereby reducing the financial impact of restricted eligibility for federal programs.

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