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The current draft of the Senate’s immigration overhaul appears to give some employers a $3,000-a-year incentive to hire a newly legalized immigrant rather than an American citizen in order to avoid the new employer mandates in the health care law.
“I think that is an issue, and I think that it needs to be addressed,” said Sen. John McCain, R-Ariz., a member of the bipartisan group of eight senators who drafted the bill.
McCain said he believes the matter will likely be addressed in the amendment process. “I hope so. We are having lots of conversations,” McCain said, adding that he doesn’t believe that the issue is insurmountable. “I think it is something we can work out,” he added.
A Senate Democratic aide familiar with the immigration talks expects the issue to be worked out. “We are willing to work through these issues as the bill works its way through the Senate,” the aide said.
The bill is currently being marked up by the Senate Judiciary Committee, a process that will continue next week. Judiciary Chairman Patrick J. Leahy told his committee members to expect late evening sessions “to try to complete this.”
Senate Majority Leader Harry Reid, D-Nev., has made the bill a priority. “I will bring immigration legislation to the floor in June, regardless of whether we have completed action on the farm bill,” he said Thursday.
The Senate measure would immediately legalize 11 million unauthorized immigrants currently in the country who meet certain criteria as the first step in a more-than-decade-long pathway to become green card holders and ultimately citizens.
During that time, the newly legalized immigrants would be permitted to work but would not be eligible for subsidies under the 2010 health care law. That, in turn, could save their employers $3,000 a year.
That’s because companies with 50 or more full-time-equivalent employees who offer unaffordable insurance will pay $3,000 a year in penalties for each full-time employee who receives subsidies to buy insurance through the new health exchanges set up by the law. No subsidies for newly legalized immigrants means no $3,000 penalty.
The loophole is the result of tension between Democrats and Republicans over the 2010 law — as well as a bipartisan agreement to postpone any means-tested benefits out of concern that newly legalized immigrants would be a burden on the government and balloon the cost of the bill.
Supporters of the bill are trying to weigh the decision not to provide health care law benefits with the possibility that it could give newly legalized workers a leg up in the job market.
McCain said providing benefits was a nonstarter for Republicans because it didn’t seem fair to allow people who came to the country illegally and are not citizens to be eligible to receive these benefits, which are funded by taxpayers.
“We cannot give people who are not citizens the same benefits; that is the fundamental principle,” McCain said. “We are trying to work around it so that an American citizen is competitive for a job.”
He also said giving the immigrants the benefits would be prohibitively expensive and put stress on entitlement programs that are already on a fiscally unsustainable path.
Sen. Marco Rubio, R-Fla., another member of the bipartisan group of senators who brokered the bill, agreed with McCain, adding that the issue is evidence that the health care law is burdensome on businesses. “It sounds to me like an admission that Obamacare discourages hiring, which has been our point the whole time,” Rubio said.
“I understand that concern; we’ve thought about [it],” Rubio said of the loophole. “But ultimately we are not going to give a costly government program to people who have violated the immigration law, and we can’t afford it. To add 10 [million] or 11 million people to the rolls of that program would just blow up the cost of the bill.”
But Rubio also believes they can work through it. “I also don’t think it’s as big a problem ultimately as people make it out to be,” he continued. “It’s an issue we were aware of, but the alternative is just not acceptable.”
Republicans, who feel the health care law was rammed through Congress over their objection and hurts economic growth, have made it a priority to repeal the statute. The GOP-run House voted to repeal it Thursday for the 37th time.
Democrats hail the law for its expansive coverage that they contend is already helping middle-class families and seniors, and they say it will ultimately save money over the long term. The Supreme Court upheld the law last summer after Republican state attorneys general sued the federal government.
The White House did not comment by press time.
Emily Ethridge contributed to this report.