NJ Fiscal Folly

Monday, February 13, 2006

NJ Healthcare and Unfunded Mandates

Unfunded mandates occur when the Federal government imposes certain statutory or regulatory requirements on a state or local government without providing any funding for the related costs. Since this happens so frequently, the term "unfunded mandate" usually only refers to those situations where the unfunded costs are particularly large.

Most of the time, state or local governments incur the costs directly (eg, by hiring new employees to comply with new requirements). However, state residents can also absorb the costs of unfunded mandates.

One relevant example in NJ is the provision of healthcare to illegal immigrants.

Federal law requires hospitals to treat anyone who enters an emergency room, regardless of the ability to pay. There is no requirement to verify whether or not the patient is a citizen or legal resident. Furthermore, many immigrants use hospital emergency rooms as primary care providers.

In theory, the Federal government enforces immigration law, to minimize the number of illegals. In fact, the Federal government does almost nothing to enforce the existing law these days.

The most reasonable estimates of the number of illegal immigrants in NJ are somewhere around 300,000-400,000 individuals, roughly 4% of the state's population. NJ hospitals spend a minimum of $200 million per year to treat this group (and the true figure could be much larger). The Federal government only provides around $6 million in yearly funding.

So who pays the rest? NJ residents ...... either directly through higher medical fees or indirectly through higher medical insurance premiums.

The only good news is that NJ hospitals are in somewhat better shape than hospitals along the US/Mexican border. Many of them are nearly bankrupt.

The US is a land of immigrants, but uncontrolled immigration imposes tremendous costs. If the Federal government won't enforce immigration law, it should at least provide adequate funding to deal with the consequences.

For further details, go to this link.

Update: The NJ Hospital Association estimates that NJ hospitals spend $250-300 million per year providing medical care to illegal immigrants.

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