Will the Public Charge Rule Reduce Safety Net Expenditures? (UPDATE)

The Issue:

Policy-makers worry about the financial burden of immigrants on the taxpayer funded safety net. The Trump administration’s August 2019 “public charge” guidance aims to discourage non-citizen participation in federal safety net programs and to deny admission to the country to those deemed likely to become a burden on the state. Legal challenges are underway, but on January 27th, 2020, the Supreme Court ruled that the policy could go into effect in the meantime. In light of this, the administration will factor in the use of non-cash safety net programs (notably Medicaid and SNAP) in determining admission to the United States and changes of status. Would this policy change significantly impact future spending on safety net programs?

Even though immigrants represent a small share of SNAP and Medicaid beneficiaries, “chilling effects” from the public charge rule could lead to noticeable reductions in program participation and costs.

The Facts:

• Public charge is not new, but under the rule it will take on new significance in immigration decisions. Public concern that newcomers might represent a financial burden to the state has been evident since colonial times. When Congress passed the first general immigration law in the 1880s, it included the ability to deny admission or deport individuals who were “unable to take care of himself or herself without becoming a public charge.” However, the law did not specify what "public charge" meant and interpretations have varied over the years. Previous guidance from 1999 had specified that the use of cash benefits or long-term care support could be considered in immigration decisions. On August 14, 2019, the United States Citizenship and Immigration Services (USCIS) published new rules expanding the definition of public charge to include prior use of food and medical assistance, and to emphasize a prospective determination about a migrant’s likely future self-sufficiency (see for instance here and here).
• The consideration of whether someone is likely to become a public charge plays a role for people applying for admission from outside of the country, and for those already in the U.S. seeking to change status—those seeking to acquire permanent residence (green cards) in particular. Some types of immigrants, such as refugees, are excluded from the rule. In addition, the rule should not directly affect those who already have green cards: The new public charge rule does not affect the transition to citizenship, so legal permanent residents are not penalized for using safety net programs in most circumstances.  (They could be denied re-admission if they leave the country for 180 days, however, because the rules applying to “admissibility” would be triggered.)
• The vast majority of low-income people living in the United States and the vast majority of those using safety net programs are U.S. born citizens. Native-born Americans represent 87 percent of all individuals living in the United States, and 84 percent of individuals living below the poverty line in the United States. Legal permanent residents and other authorized non-citizens are typically eligible to participate in federal safety net programs after five years in the United States, assuming they meet other program requirements (see here and here). Immigrant participation in the largest safety net programs that would be impacted by the new rule mirrors immigrant shares in the population. The Medicaid program provides health insurance to low-income individuals; U.S.-born individuals make up 86 percent of participants. The SNAP program offers food benefits to low-income households; 86 percent of those living in SNAP households are U.S.-born.
• Undocumented immigrants are largely excluded from the safety net, and are therefore not directly affected by the public charge rule. Among non-citizens, just under half are undocumented immigrants and therefore ineligible for major federal safety net programs including non-emergency Medicaid and SNAP  (see "Do Undocumented Immigrants Overuse Government Benefits?"). Undocumented immigrants are able to apply for assistance on behalf of their citizen children, however, so may live in a household receiving SNAP or Medicaid. The new public charge rule does not penalize immigrants who apply for benefits solely on behalf of their U.S. citizen children.
• Fear and confusion around the public charge rule may have a bigger impact than the letter of the law. The public charge rule may cause legal permanent residents to avoid participation in safety net programs, even though doing so would not affect their pathway to citizenship in most cases. It may also discourage undocumented immigrants from enrolling their children in Medicaid and SNAP even though doing so should not affect future status changes. Preliminary research suggests that immigrants are indeed wary of enrolling in government benefits. 
• Between March 2018 and March 2019, SNAP participation fell in low-income families with immigrants. Among households in poverty with kids, participation rates are consistently higher for households that are comprised entirely of U.S.-born residents. In March 2019 (the most recent data available), 12-month SNAP participation rates fell for immigrant and mixed-immigrant households compared to the prior year, but rose slightly for households without any immigrants (see chart). It is difficult to determine how much of this trend was due to the public charge rule’s proposal in 2018 rather than other factors related to policy, the economy, or statistical noise in the survey data.
• If “chilling effects” are sufficiently large, the public charge rule could generate noticeable reductions in SNAP and Medicaid spending. Although only 14 percent of SNAP household residents are themselves foreign-born, about 27 percent of residents of SNAP households live with at least one immigrant. For Medicaid, there is a similar story:  14 percent of Medicaid participants are foreign-born and 32 percent of Medicaid participants live with at least one immigrant. If a substantial fraction of these immigrant households withdrew from benefit programs due to fear and confusion, the reduction in spending would be non-trivial. (Because childhood access to food and health insurance has long-term economic benefits, the short-term savings could be offset by increased government expenditures in the future.)
• Because most households of immigrants also include native-born individuals, the “chilling” would impact almost as many U.S.-born individuals as immigrants — the majority of them children. For example, only 5 percent of those currently living in SNAP households are immigrants in fully immigrant households.  9 percent are immigrants in mixed-immigrant households and 12 percent are U.S.-born individuals living with immigrants. Almost three-quarters of the U.S.-born citizens affected if households with immigrants withdraw from the SNAP program are under the age of 18.