The Demand for Health Insurance and Medical Care: Evidence from the Deferred Action for Childhood Arrivals

The Deferred Action for Childhood Arrivals (DACA) executive order was a milestone in the hotly contentious immigration debate. DACA, signed by the Obama Administration in the summer of 2012, granted temporary reprieve from deportation and work authorization for eligible youth. Given its recent implementation and lack of reliable data on unauthorized immigrants, little work has been done to assess the impacts of DACA. The purpose of this study is to fill in this gap by identifying unauthorized immigrants in several nationally representative data sets and to investigate the effects of DACA on the demand for health insurance and medical care.

The National UnDACAmented Research Project (NURP), the first large-scale study of DACA recipients, revealed that 60% of DACA recipients obtained new jobs, 45% experienced an increase in wages, and 21% obtained health insurance. Although this evidence suggests there are clear economic and health benefits as a result of DACA, the impact of these policies in creating new economic opportunities and better health outcomes is unclear. The main limitation in the growing DACA literature is the lack of evidence demonstrating causality, which is directly attributable to the absence of sufficient and sizeable data sets identifying unauthorized immigrants.

The causal effect of DACA on private health insurance uptake is estimated by a difference-in-differences methodological approach using the Current Population Survey and the Survey of Income and Program Participation. A latent variable model is constructed with non-modifiable characteristics to identify the treatment and control group at distinct cutoff values in each time period.  The aim of this approach is to identify unauthorized immigrants as the treatment group and documented immigrants as the control group. The descriptive estimates suggest there are approximately 1.6 million unauthorized immigrants who qualify for DACA. Further investigation reveals there are no systematic differences in observed characteristics between the treatment and control group. Preliminary results from the difference-in-differences estimation suggest DACA eligible unauthorized immigrants experienced a 7-percentage point increase (16%) in private health insurance uptake as a result of DACA.

The implementation of DACA provides a unique natural experiment affecting the labor and subsequent markets such as those related to health. Labor market legitimization allows unauthorized immigrants to enter the formal labor market and negotiate higher wages and employer-paid medical insurance without fear of deportation. Further analysis in this study will link the Medical Expenditure Panel Survey and the Integrated Health Interview Series to check the robustness of the preliminary results and estimate, through simulation, the demand for health insurance and medical care among unauthorized immigrants.

Unauthorized immigrants (including DACA recipients) are currently banned from federal healthcare programs and from participating in federal health insurance exchanges, making employer-based and privately purchased insurance the main alternative for health insurance. Estimating the demand for health insurance and medical care among this marginalized population can therefore inform policies to better serve this population and in the process address the issue of rising healthcare costs. Thus, our finding poses important implications for policymakers, public policy research, employers, and for immigrant youth and their families.