DHS Public Charge Regulation Could Drive Medicaid Coverage Losses

Manatt on Health: Medicaid Edition

On August 14, the U.S. Department of Homeland Security (DHS) released a final rule that imposes significant new barriers on immigrants legally applying to enter and remain in the country.1 For decades, DHS has considered whether an immigrant is likely to become a “public charge”—a person “primarily dependent” on the government for support—when reviewing his or her application for admission to the United States or to become a lawful permanent resident (LPR, or a green card holder). DHS’s final rule makes sweeping changes to this policy by redefining public charge and giving DHS greater discretion to consider income, English proficiency, benefit use, and other circumstances as evidence of future dependence on the government; expanding the scope of relevant benefits to include most Medicaid benefits, the Supplemental Nutrition Assistance Program (SNAP), and housing assistance; and subjecting new groups of immigrants to public charge determinations.

These changes, which are scheduled to go into effect on October 15, 2019, will make it harder for lower-income, lower-skilled immigrants from non-English-speaking countries to gain admission to the United States or to obtain a green card—the first step on a person’s path to citizenship. The rule could also have major consequences for Medicaid coverage nationwide by deterring immigrant families from enrolling in benefits, even though most legally present immigrants who are in the country long enough to be eligible for Medicaid are not subject to a public charge determination. The direct impact of DHS’s changes related to benefits may be relatively limited because only a narrow group of immigrants are eligible to participate in public programs and DHS exempts most of those immigrants (or their use of benefits) from public charge.2 For example, refugees and asylees are eligible for Medicaid but exempt from public charge determinations. The rule also excludes from consideration as “benefit use” certain Medicaid services that are available to individuals who could be subject to a public charge determination, including services to treat an emergency condition, as well as Medicaid services provided to pregnant women and children.

Nonetheless, immigrants and their family members may forgo or disenroll from health, nutrition, and housing benefits even if the rule does not apply to them out of confusion, distrust of the federal government, or fear of jeopardizing their immigration status or the status of their loved ones. These chilling effects have already been documented in immigrant communities as a result of DHS’s proposed rule published last October, which received more than 266,000 public comments (most in opposition). From a survey of roughly 2,000 adults in immigrant families, the Urban Institute found that about 13.7% of respondents reported that they or a family member did not participate in a noncash government program such as Medicaid/CHIP, SNAP, or housing subsidies in 2018 for fear of risking the ability to obtain a green card.3 This trend was higher (20.7%) for adults in low-income families. As outlined below, these chilling effects would also have financial implications for healthcare providers, human service organizations, and state and local governments.

This Manatt on Health: Medicaid Edition provides an overview of the key policy changes in DHS’s “Inadmissibility on Public Charge Grounds” rule and explores the likely consequences of the regulation.

Key Proposed Changes

Under the Immigration and Nationality Act (INA), applicants for temporary or permanent visas, admission, or adjustment of status to an LPR may be denied if they are determined likely to become a public charge.4 Consistent with guidance released in 1999, DHS has adjudicated public charge determinations for decades by assessing whether a person is or is likely to become “primarily dependent” on two sets of public benefits:5 (1) cash assistance under the Temporary Assistance for Needy Families (TANF) program, Supplemental Security Income (SSI), or state and local cash assistance programs; and (2) institutionalization for long-term care at the government’s expense (e.g., Medicaid coverage for nursing facility services). DHS also considers an applicant’s “totality of circumstances,” which involves weighing the following statutory factors: age; health; family status; assets, resources, and financial status; education and skills; and whether he or she has an affidavit of support (if one is required).6

The final rule overhauls this long-standing framework in four key ways:

1. Redefines who qualifies as a “public charge.” DHS changes the definition of a public charge from someone who is “primarily dependent” on two discrete sets of benefits to a person who simply receives one or more of the expanded benefits described above during a set period of time (more than 12 consecutive or non-consecutive months within any 36-month period).7 Receiving two benefits in one month will count as two months of benefit use. 

2. Includes new public benefits in public charge determinations. The final rule expands the scope of the benefits considered in a public charge determination to include, for the first time, health, nutrition, and housing programs.8 In addition to cash assistance and publicly funded institutionalization, public charge determinations will consider Medicaid coverage (with exceptions) as well as the receipt of SNAP benefits, Section 8 Housing Assistance and Project-Based Rental Assistance, and federally subsidized housing. 

DHS expressly exempts the following Medicaid benefits from public charge consideration: benefits received for an emergency medical condition; benefits provided under the Individuals with Disabilities Education Act (IDEA); school-based Medicaid services; and benefits received by immigrants under 21 and pregnant women through 60 days postpartum. Additionally, the final rule exempts any public benefits received by certain children of U.S. citizens whose citizenship status is pending, and immigrants enlisted in the U.S. Armed Forces (as well as their spouses and children).

The following health benefits are not included in DHS public charge assessments: the Children’s Health Insurance Program (CHIP); Affordable Care Act (ACA) Marketplace subsidies;9 the Medicare Part D Low-Income Subsidy; and state or locally-funded noncash programs. The rule also emphasizes that DHS will only look at an individual’s personal use of benefits, not benefits used by a child or other family member.

3. Gives DHS greater discretion regarding a person’s likelihood of future dependence. Currently, DHS assesses the totality of an applicant’s circumstances when determining his or her likelihood of becoming a public charge in the future. DHS considers six factors: age; health; family status; assets, resources, and financial status; education and skills; and whether an applicant has an affidavit of support (if one is required).

The final rule maintains this basic totality of circumstances test, but sets forth new standards and evidence for these factors that DHS officers must consider and adds a new factor: the individual’s prospective immigration status and expected period of admission.10 Many of these changes will stack the deck against lower-income immigrant families. For example, the final rule permits DHS to consider whether a person’s income is above or below 125% of Federal Poverty Guidelines (FPG),11 a person’s credit history, past applications for or limited receipt (e.g., less than 12 months within a 36-month period) of public benefits, English proficiency, occupational skills, family size, and employment history (though for those without past or current employment, DHS may consider whether an applicant is a household’s primary caregiver). The final rule also outlines conditions that will be heavily weighted for or against an applicant.12 One heavily weighted condition against the applicant will be the receipt of (or approval to receive) benefits for more than 12 months within 3 years of an application. By contrast, DHS will give priority to wealthier applicants by heavily and positively weighting incomes of at least 250% FPG.

4. Subjects new groups of immigrants to public charge. Consistent with the INA and long-standing practice, the final rule applies public charge to immigrants seeking to legally enter the United States or to obtain a green card. In addition, the rule expands public charge determinations to immigrants seeking an extension of stay or a change of status (e.g., extending a current visa or changing visa types such as from a student visa to an employment visa). For these new groups, DHS will only consider applicants’ past or current receipt of benefits (unlike applicants for admission and green card status, who will be evaluated for current, past, and potential future benefit use).

Implementation Considerations

Alongside the final rule, DHS issued a variety of new and updated immigration forms that the agency will use as part of its public charge adjudication process. The new I-944 form—the “Declaration of Self-Sufficiency”—will be required to inform public charge determinations. The form relies on self-reported information about an individual’s past receipt of (or applications for) public benefits as well as other income, education, and household size information that DHS will use to make a public charge determination. Completing the form could be burdensome for individuals who will need to provide proof of income, education, English proficiency, health coverage and other factors, and could be confusing for individuals who may not be certain about whether they received federal benefits (which count in public charge determinations) or state/locally funded noncash benefits (which do not). At present, benefit-granting agencies will not be required to verify the information submitted on this form. In the future, DHS plans to enter into information-sharing agreements with specific agencies to verify applicants’ information.13 Manatt Health is continuing to monitor this aspect of implementation.

Potential Impact

Chilling Effects for Immigrant Families. The final rule could have significant consequences for immigrants’ continued enrollment in Medicaid and other public programs. Even though the final rule makes major changes to the treatment of benefits during public charge determinations, these changes may affect only a limited number of individuals directly, since many immigrants who are eligible for public programs are also exempt from public charge determinations or are eligible only for benefits whose use is excepted under the rule (e.g., pregnant women using Medicaid). More significant impacts may arise from chilling effects that lead immigrants and their family members—including citizens—to avoid public benefits and services out of fear of jeopardizing their or their family members' immigration status, distrust of the federal government’s immigration enforcement practices, and confusion about whether the rule applies to them or the benefits they use. Thus, in addition to discouraging the use of Medicaid, SNAP, or housing assistance, chilling effects may lead immigrants to disenroll from or forgo federal, state, and local programs that fall outside public charge’s reach, such as CHIP.

These effects could be significant for the estimated 23 million noncitizens and citizens in immigrant families who use public benefits today.14 Manatt Health estimated that 13.2 million Medicaid and CHIP enrollees could be subject to chilling effects, based on an analysis of the proposed rule.15

Healthcare Providers. Chilling effects that lead immigrants and their families to forgo Medicaid and other benefits could lead to adverse health effects and higher healthcare costs if immigrants avoid preventive care or early medical interventions. As a result, healthcare providers could see a commensurate increase in uncompensated care. For example, in an analysis of potential chilling effects associated with the DHS proposed rule, Manatt Health estimated that $17 billion in hospital payments could be put at risk.16 Safety-net providers such as hospitals and community health centers would likely feel these effects most acutely. These trends could drive up costs for providers overall, particularly in states with large immigrant populations. Additionally, though Marketplace subsidies are not included in the rule, disenrollment from Marketplace coverage driven by the chilling effect could impact the risk pool and drive up costs for other consumers.

Healthcare Workforce. DHS’s rule will disproportionately affect low-paid immigrant workers already in the country or seeking to enter. Nursing home and home health aides, for example, are often paid low wages and have few employer-provided benefits, making it more difficult for workers like these to enter or stay in the country and exacerbating existing healthcare workforce shortages.

States and Localities. States and localities will bear costs related to increases in uncompensated care and are likely to face added costs for social services as families increasingly depend on emergency food banks, shelters, and other safety-net resources in lieu of federally funded public programs. In addition to the loss of state Medicaid revenues, grocery retailers participating in SNAP and landlords participating in federally funded housing programs also could experience reduced revenues.

States and localities also could face costs associated with implementing the rule, including costs to notify program applicants about the consequences of using benefits and to update systems to better track benefit use and, potentially in the future, share information with DHS.   

Looking Ahead

The rule is scheduled to go into effect on October 15, although litigation in multiple states may delay the rule’s implementation. In the interim, clarifying to whom the rule applies and whether benefit use will impact an immigrant’s legal status will be critical to preventing immigrant families from unnecessarily forgoing Medicaid and other benefits that support health, safety, and financial security and independence.

1 Inadmissibility on Public Charge Grounds, 84 Fed. Reg. 41292-41508 (Aug. 14, 2019), https://www.federalregister.gov/documents/2019/08/14/2019-17142/inadmissibility-on-public-charge-grounds.

2 Numerous groups of immigrants are exempt from public charge determinations under the rule, including refugees, asylees, certain Cuban, Haitian, and Central Americans, and victims of trafficking and domestic violence. Importantly, public charge determinations do not apply to individuals seeking to renew green cards or to green card holders applying for citizenship. However, current green card holders can become subject to public charge if they leave the country either (1) for more than 6 months and/or (2) with certain criminal convictions, and then seek to reenter.

3 Hamutal Bernstein et al., Urban Institute, One in Seven Adults in Immigrant Families Reported Avoiding Public Benefit Programs in 2018 (2019), https://www.urban.org/sites/default/files/publication/100270/one_in_seven_adults_in_immigrant_families_reported_avoiding_publi_7.pdf.

4 Immigration and Nationality Act (INA), 8 U.S.C. § 1182.

5 Field Guidance on Deportability and Inadmissibility on Public Charge Grounds (“Field Guidance”), 64 Fed. Reg. 28689 (May 26, 1999), https://www.govinfo.gov/content/pkg/FR-1999-05-26/pdf/99-13202.pdf.

6 On August 23, the Centers for Medicare & Medicaid Services (CMS) issued a State Health Official (SHO) letter related to Medicaid and CHIP and affidavits of support. The SHO does not impact public charge policy. Rather, the SHO addresses issues relevant for an LPR who is sponsored under an affidavit of support (specifically how a sponsor’s income impacts an LPR’s eligibility for Medicaid and CHIP, and circumstances under which sponsors may be asked to repay a state for benefits used by the LPR). See CMS SHO # 19-004 Re: Sponsor Deeming and Repayment for Certain Immigrants (Aug. 23, 2019), https://www.medicaid.gov/federal-policy-guidance/downloads/sho19004.pdf.

7 8 C.F.R. 212.21(a).

8 8 C.F.R. 212.21(b).

9 DHS will consider a person’s enrollment in private insurance as a heavily weighted positive circumstance unless the individual receives Marketplace subsidies. If the individual has subsidized coverage, private insurance will count as a normally weighted positive circumstance. 8 C.F.R. 212.22(c)(2)(iii).

10 8 C.F.R. 212.22(b). With respect to this new factor, DHS will consider the immigration status that the individual is seeking and the expected period of admission as it relates to the individual’s ability to financially support himself or herself during the duration of the alien’s anticipated stay.

11 The rule refers to FPG rather than the Federal Poverty Level (FPL). The FPGs are published by the Department of Health and Human Services annually and are used to determine financial eligibility for certain federal programs. For a family of four, 125% FPG is approximately $31,375 and 250% FPG is approximately $63,000.

12 8 C.F.R. 212.22(c).

13 84 Fed. Reg. at 41457.

14 Jeanne Batalova, Michael Fix, and Mark Greenberg, Migration Policy Institute, Millions Will Feel Chilling Effects of U.S. Public-Charge Rule That Is Also Likely to Reshape Legal Immigration (Aug. 2019), https://www.migrationpolicy.org/news/chilling-effects-us-public-charge-rule-commentary.

15 Cindy Mann, April Grady, and Allison Orris, Medicaid Payments at Risk for Hospitals Under the Public Charge Proposed Rule (Nov. 2018), https://www.manatt.com/Manatt/media/Documents/Articles/Medicaid-Payments-at-Risk-for-Hospitals-Under-the-Public-Charge-Proposed-Rule_Manatt-Health_Nov-2018.pdf.

16 Id. Estimates are based on Medicaid spending in 2016. Of the estimated $17 billion in hospital payments potentially at risk in 2016, $7 billion was associated with noncitizen enrollees and $10 billion was associated with citizen enrollees who have a noncitizen family member.