Are amnesty and ‘Medicare for All’ feasible?

OPINION:

As Halloween approaches, it’s not just haunted houses and ghosts that should send chills down your spine. The real nightmare is America’s fiscal crisis — a terrifying collision of unsustainable spending and an exploding national debt.

At the heart of the fright are the country’s spiraling mandatory Medicare and Social Security programs, which account for about half the federal budget. As Medicare creeps toward insolvency by 2036, proposals for even more spending, such as “Medicare for All,” and amnesty for millions of illegal immigrants threaten to send the country faster over a fiscal cliff.

The Biden-Harris administration’s policies have led to a surge in illegal immigration, with an estimated 12.5 million immigrants living in the U.S. illegally. Proposals to grant them legal status may sound appealing. Still, they further strain social services such as Medicare.

Because Medicare is a pay-as-you-go system that relies on payroll taxes from current workers to fund retirees’ health care, adding millions of new recipients — many of whom are older — would only accelerate the program’s ensuing collapse. The estimated 90% of illegal immigrants here younger than 55 could be eligible with 10 years of work history before turning 65. The aggregate cost to taxpayers of recipients retiring later could be at least $1.8 trillion over time.

Vice President Kamala Harris’ Medicare for All plan, coupled with amnesty, could cost $2 trillion more over the next decade to cover newly legalized immigrants, as a new study states.

Combined with the full cost of Medicare for All for current Americans, the net cost could be $44 trillion, demanding unprecedented tax increases or massive cuts to essential services.

And while Ms. Harris argues that these programs promote fairness and access, the fiscal reality is terrifying. The government’s spending would spiral out of control, with no clear way to rein in the costs.

Former President Donald Trump has emphasized stricter immigration laws and border security. While Mr. Trump’s approach may help reduce the immediate costs of adding more people to programs such as Medicare, it does little to address the deeper issues of an aging population and soaring health care costs. Unless something is done to reform Medicare, the program will remain a ticking time bomb.

The fiscal implications of immigration are complex. On the one hand, younger, higher-skilled immigrants contribute to the economy by filling labor shortages and paying taxes, which help support programs such as Medicare. On the other hand, older and lower-skilled immigrants tend to impose a net drain on public resources.

Research shows that immigrants arriving in the U.S. after age 55 can impose a fiscal burden of up to $400,000 over their lifetime, while younger, educated immigrants contribute more than $1 million to the federal budget. Blanket amnesty would fail to account for these differences, much like a one-size-fits-all costume that doesn’t fit anyone quite right.

The real horror story, however, is Medicare itself. The Inflation Reduction Act of 2022 was meant to curb rising health care costs, but it has only added to the chaos. With price controls on prescription drugs, Medicare premiums are rising faster than ever, up 21% in 2024 alone, and the number of available drug plans has dropped by nearly 100.

Rather than containing costs, the law’s price controls have stifled innovation and driven up prices, meaning older Americans have fewer and more expensive options. This could become a nightmare when access and quality of care are sacrificed.

So, what’s the way out of this fiscal haunted house?

First, the U.S. needs a sustainable budget with a strict federal spending cap tied to population growth and inflation. We can avoid the terrifying prospect of runaway deficits by cutting spending now and limiting how fast the government can spend after that. Expanding work requirements for government assistance programs such as Medicaid would help reduce dependency on taxpayer-funded benefits and encourage self-sufficiency.

A market-based reform system is crucial for immigration. A solution is a visa auction system where employers bid on visas for immigrants based on their skills and economic value.

By pricing visas based on demand, the U.S. could ensure that immigrants contribute meaningfully to the economy while filling labor gaps without burdening social services. Such a system would be a much-needed reform to correct decades of failed immigration policies and prevent the horrors of government failures.

If America wants to avoid fiscal disaster, policymakers must confront these issues head-on. Granting amnesty and expanding Medicare without reform is like opening the door to a haunted house — you may not know what horrors await, but you know they’re lurking. By balancing immigration with sustainable economic policies and reforming programs like Medicare, the U.S. can ensure a more prosperous, fiscally sound future.

The time to act is now before this fiscal nightmare becomes a reality.

• Vance Ginn is president of Ginn Economic Consulting and host of the “Let People Prosper” podcast. He was previously chief economist of the Trump White House’s Office of Management and Budget. Follow him on X @VanceGinn.