Lowering hard-working families’ child care costs is a core pillar of “Bidenomics”
From the beginning of this Administration, President Biden and Vice President Harris have been focused on child care costs as a critical challenge for families. That is why President Biden signed the most comprehensive set of executive actions any President has ever taken to make care more affordable and accessible for hard-working families, and provide support for care workers and family caregivers while strengthening the care economy. In his Executive Order (EO) that he signed in April, the President directed the Department of Health & Human Services (HHS) to consider advancing policies that reduce child care costs for families and improve provider payment policies to strengthen the child care market.
Today, Vice President Harris is announcing new steps to deliver on the fight to lower the cost of child care, strengthening the Child Care & Development Block Grant (CCDBG) program, which supports 1.5 million children and their families each month with child care assistance. Specifically, the Vice President will announce an HHS notice of proposed rulemaking (NPRM) that would:
- Cap child care copayments for working families at no more than 7% of a family’s income and encourage states to waive copayments for families at or below 150% of the federal poverty level;
- Improve financial stability for child care providers and incentivize their participation in the CCDBG program by ensuring they are paid on-time and based on program enrollment instead of attendance; and,
- Make it easier for families to access CCDBG by encouraging states to accept online applications for CCDBG enrollment and to make siblings of children who already receive the subsidy presumptively eligible for benefits.
The NPRM builds upon a core pillar of the “Bidenomics” agenda by lowering child care costs and improving the financial stability of child care providers so that more parents can find child care when and where they need it.
Lower Child Care Costs for Working Families
Child care costs are too high for many families. HHS estimates that, between 2005 and 2021, the average family copayment increased nearly 20%. High copayments may mean that families cannot afford to participate in the CCDBG program and instead have to patch together child care, reduce work hours, or exit the workforce entirely. In addition, research from the U.S. Census Bureau’s Survey of Income and Program Participation concluded that families with low incomes paid five times more than families with higher incomes, as a portion of their income. In 2016, HHS established 7% of family income as the federal benchmark of an affordable child care copayment. However, currently, only 14 states have set copayment rates for families participating in CCDBG at or below this level.
The NPRM would reduce the significant financial strain that high copayments can cause for families receiving child care assistance by capping copayments at no more than 7% of a family’s income. Nearly 80,000 families would see their child care payments reduced due to the 7% copayment cap. The proposed rule also encourages states to waive copayments for families at or below 150% of the federal poverty level. This change could eliminate copayments entirely for these families and save a family of three more than $250 a month in Ohio, nearly $300 a month in North Carolina, and over $350 in New Hampshire.
Improve Financial Stability of Child Care Providers
Child care providers that get payments through CCDBG experience burdens of their own, which disincentivize their participation in the program. For example, families typically pay for child care prior to receiving services (e.g.,payment for child care for the month of February is due February 1st) because providers need to cover expenses like payroll and rent. However, only eight states currently pay CCDBG child care providers in this manner. Further, nearly one-third of states continue to pay CCDBG providers based on attendance as opposed to enrollment – meaning providers’ payments can be adjusted downward if children miss days.
The NPRM would stabilize operations for participating providers and encourage more providers to participate in CCDBG by ensuring that providers are paid prospectively instead of weeks after providing services to children and families. Nearly 200,000 providers would start getting paid on-time as opposed to retrospectively. Additionally, the proposed rule would ensure that providers are paid based on program enrollment, giving providers needed financial stability. Over 100,000 providers would start getting paid based on enrollment instead of attendance, offering providers reimbursements that are more stable.
Make it Easier for Families to Access CCDBG
Some families currently face barriers in accessing CCDBG because of challenging enrollment processes and paperwork burdens. For instance, in one-third of states, families still use paper applications to access child care assistance. Additionally, families in most states who already benefit from CCDBG for one child must re-submit their eligibility information if they have another child.
The NPRM encourages states to streamline eligibility and enrollment processes to make it easier for families to receive child care assistance faster and make program bureaucracy less likely to disrupt parent employment, training, and education and impede access to child care. For instance, the NPRM encourages all states to accept online applications for enrollment – extending a policy that already exists in two out of three states. The proposed rule would also encourage states to make siblings of children who already receive subsidy presumptively eligible for benefits, making it easier for families to get the assistance they need. These changes would help ensure timely access to care for families experiencing a significant life change and reduce the up-front burden on those families.