Immigration bill would increase Social Security trust fund

A bipartisan immigration bill pending in the Senate would strengthen the Social Security trust fund by adding millions of workers to tax rolls, and provide a boost to the overall economy, according to an analysis Wednesday by the Social Security Administration.

The finding came in a letter to Sen. Marco Rubio, R-Fla., who requested the analysis, from Stephen C. Gross, chief actuary for the agency.

It could provide a boost for the immigration bill, which has been attacked by some conservatives as overly costly, as the Senate Judiciary Committee prepares to take up the legislation for amendments and votes beginning Thursday. Meanwhile, a separate dispute loomed as religious leaders warned that adding a gay rights provision to the immigration legislation could cost their support.

Gross' analysis said the immigration bill would boost Social Security's coffers by more than $240 over the coming decade and add $64 billion in new tax revenues to Medicare. It also would increase the size of the economy by a full percentage point by 2017, and increase employment.

Gross wrote that the overall effect of the bill on the long-range trust fund balance "will be positive."

Social Security has long-term financial problems because, as more people retire and live longer, there will be relatively fewer workers paying into the system. In 1960, there were 4.9 workers paying Social Security taxes for each person getting benefits. Today, there are about 2.8 workers for each beneficiary, a ratio that will drop to 1.9 workers by 2035 under current law, according to projections by the Congressional Budget Office.

The actuary's letter suggests the immigration bill would slow this trend. Under the bill, there would be nearly 6.6 million more workers paying Social Security taxes in 2024, the actuary projects. That same year, there would be an additional 683,000 people getting benefits. That's nearly 10 additional taxpayers for each new beneficiary.

The Social Security analysis is the first government analysis to quantify economic impacts from the far-reaching bill authored by Rubio and seven other senators, both Democratic and Republican.  The legislation came under attack earlier this week in a disputed report from the conservative Heritage Foundation, which claimed the bill would cost $6.3 trillion over 50 years as newly legalized immigrants consume government benefits without paying an equal amount in taxes.

The Social Security analysis doesn't attempt to determine the overall cost of the bill. That figure will be provided by the Congressional Budget Office, which has not yet released its projections.

But the analysis does measures some impacts of the bill, which aims to secure the border, create new avenues for workers to come legally to the U.S., ensure employers don't hire workers here without legal status, and give a path to citizenship to the millions already here illegally.

The analysis finds that of about 11.5 million immigrants here illegally who would be eligible under the bill, around 8 million would apply for and be granted legal status. Many would immediately become taxpayers, but the bill prevents them from receiving government benefits for over a decade.

In the longer term most of these new taxpayers would eventually receive benefits, but the actuary said he still expects the bill to improve the long-term health of Social Security.

The analysis also said that provisions in the bill would reduce by about a half-million per year the future number of people entering the country illegally.

On the gay rights issue, religious leaders issued a warning Wednesday about the impact on the immigration bill if Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., moves forward with an amendment to allow gay Americans to sponsor their foreign partners for U.S. residence like straight married Americans can.

"We're extremely hopeful that this bill will remain an immigration bill and not get tangled up with the issue of gay rights," Richard Land, a leader of the Southern Baptist Convention, told reporters on a conference call. "But if it did, if it did, the Southern Baptist Convention would not be able to support the bill."

Other religious leaders on the call echoed Land's warnings. Leith Anderson, president of the National Association of Evangelicals, labeled the gay rights provision "a divisive distraction that must not derail immigration reform."

Rubio and the three other Republican authors of the immigration bill have said that such a provision could cost their support and kill the bill.
  "If that issue is injected into this bill, this bill will fail. It will not have the support. It will not have my support," Rubio said last week in an interview with conservative radio host Hugh Hewitt.

If Leahy were to offer a gay marriage amendment, attention would turn to Sens. Chuck Schumer, D-N.Y., and Dick Durbin, D-Ill., to see whether they would support it. Schumer and Durbin are among Democratic authors of the bill and both sit on Leahy's committee. Both have expressed support for Leahy's goals on the gay marriage issue without saying how they would vote on his amendment.

Gay rights groups are lobbying aggressively for the gay marriage language to be included and they dispute suggestions that it would jeopardize the bill.

"It's not something that should be considered a poison pill or a hot potato," said Gregory T. Angelo, who runs the gay GOP group Log Cabin Republicans.

"There are 11 states and the District of Columbia that recognize relationships between committed same-sex couples," Angelo said in an interview. "These are individuals who are here legally, who are in marriages and who are denied the rights of their straight counterparts."

President Barack Obama included a provision recognizing gay partnerships in his own immigration bill, but he has made it clear in recent comments that the Senate measure meets his criteria for an immigration overhaul, even without the provision.

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Study: Health care overhaul to increase claims costs by 32 percent

Medical claims costs -- the biggest driver of health insurance premiums -- will jump an average 32 percent for Americans' individual policies under President Obama's overhaul, according to a study by the nation's leading group of financial risk analysts. 

The report could turn into a big headache for the Obama administration at a time when many parts of the country remain skeptical about the Affordable Care Act. The estimates were recently released by the Society of Actuaries to its members. 

While some states will see medical claims costs per person decline, the report concluded the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers. 

The disparities are striking. By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio, more than 20 percent for Florida and 67 percent for Maryland. Much of the reason for the higher claims costs is that sicker people are expected to join the pool, the report said. 

The report did not make similar estimates for employer plans, the mainstay for workers and their families. That's because the primary impact of Obama's law is on people who don't have coverage through their jobs. 

The administration questions the design of the study, saying it focused only on one piece of the puzzle and ignored cost relief strategies in the law such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick. The study also doesn't take into account the potential price-cutting effect of competition in new state insurance markets that will go live on Oct. 1, administration officials said. 

"It's misleading to look at only some of the provisions of the law because, taken together, the law will reduce costs," said Health and Human Services spokeswoman Erin Shields Britt. 

But a prominent national expert, recently retired Medicare chief actuary Rick Foster, said the report does "a credible job" of estimating potential enrollment and costs under the law, "without trying to tilt the answers in any particular direction." 

"Having said that," Foster added, "actuaries tend to be financially conservative, so the various assumptions might be more inclined to consider what might go wrong than to anticipate that everything will work beautifully." Actuaries use statistics and economic theory to make long-range cost projections for insurance and pension programs sponsored by businesses and government. The society is headquartered near Chicago. 

Kristi Bohn, an actuary who worked on the study, acknowledged it did not attempt to estimate the effect of subsidies, insurer competition and other factors that could mitigate cost increases. She said the goal was to look at the underlying cost of medical care. 

"Claims cost is the most important driver of health care premiums," she said. 

"We don't see ourselves as a political organization," Bohn added. "We are trying to figure out what the situation at hand is." 

On the plus side, the report found the law will cover more than 32 million currently uninsured Americans when fully phased in. And some states -- including New York and Massachusetts -- will see double-digit declines in costs for claims in the individual market. 

Uncertainty over costs has been a major issue since the law passed three years ago, and remains so just months before a big push to cover the uninsured gets rolling Oct. 1. Middle-class households will be able to purchase subsidized private insurance in new marketplaces, while low-income people will be steered to Medicaid and other safety net programs. States are free to accept or reject a Medicaid expansion also offered under the law. 

Obama has promised that the new law will bring costs down. That seems a stretch now. While the nation has been enjoying a lull in health care inflation the past few years, even some former administration advisers say a new round of cost-curbing legislation will be needed. 

Bohn said the study overall presents a mixed picture. 

Millions of now-uninsured people will be covered as the market for directly purchased insurance more than doubles with the help of government subsidies. The study found that market will grow to more than 25 million people. But costs will rise because spending on sicker people and other high-cost groups will overwhelm an influx of younger, healthier people into the program. 

Some of the higher-cost cases will come from existing state high-risk insurance pools. Those people will now be able to get coverage in the individual insurance market, since insurance companies will no longer be able to turn them down. Other people will end up buying their own plans because their employers cancel coverage. While some of these individuals might save money for themselves, they will end up raising costs for others. 

Part the reason for the wide disparities in the study is that states have different populations and insurance rules. In the relatively small number of states where insurers were already restricted from charging higher rates to older, sicker people, the cost impact is less. 

"States are starting from different starting points, and they are all getting closer to one another," said Bohn. 

The study also did not model the likely patchwork results from some states accepting the law's Medicaid expansion while others reject it. It presented estimates for two hypothetical scenarios in which all states either accept or reject the expansion. 

Larry Levitt, an insurance expert with the nonpartisan Kaiser Family Foundation, reviewed the report and said the actuaries need to answer more questions. 

"I'd generally characterize it as providing useful background information, but I don't think it's complete enough to be treated as a projection," Levitt said. The conclusion that employers with sicker workers would drop coverage is "speculative," he said. 

Another caveat: The Society of Actuaries contracted Optum, a subsidiary of UnitedHealth Group, to do the number-crunching that drives the report. United also owns the nation's largest health insurance company. Bohn said the study reflects the professional conclusions of the society, not Optum or its parent company.

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