Biden’s big bet on family care won't pay off overnight

(Bloomberg) –President Joe Biden promises cheaper and more accessible care for children, the elderly and disabled once his $2 trillion social spending package passes Congress, yet it will take years to set up programs to help struggling families.

To deliver on the heart of Biden’s economic agenda, policymakers will have to address worker shortages worsened by the pandemic and scale up business sectors that already struggle with lengthy waiting lists. They also must galvanize state bureaucracies that face their own political and financial constraints.

The risk of delay in delivering tangible results hangs over Biden and Senate Democrats, who return this week to continue deliberations on the tax-and-spending legislation with next year’s midterm congressional elections fast approaching.

“What matters is what people see in their lives, not what politicians tell them,” said Tom Davis, who headed House Republicans’ campaign arm when he served in Congress. “It’s your word versus mine in a campaign until the benefit actually comes in.”

Massive federal programs often take years to fully get off the ground. The health insurance exchanges at the core of President Barack Obama’s Affordable Care Act didn’t open until three and a half years after the legislation became law and then it took several months to fix glitches that plagued online enrollment. But in the immediate aftermath, the law was unpopular and Democrats lost control of the House and saw their comfortable Senate majority whittled down.

Biden’s child care program is one of the most sweeping initiatives in the Build Back Better legislation, promising to provide high-quality care to most American families costing no more than 7% of their income and no more than 2% of income for families with earnings below their state’s median. The average family currently spends 13%, according to the U.S. Treasury.

But even some child care experts who support the initiative doubt many more families will get subsidized care by next November’s election, given the complexities of standing up a program administered by state governments.

“If it happens in a handful of states, I think that’s optimistic,” said Linda K. Smith, who oversaw federal child care programs for five years as a senior U.S. Health and Human Services Department official in the Obama administration.

Even if Democrats are able to pass the legislation by December, states still must submit plans for the new program before getting their funding and commit to meeting a 10% cost match beginning with the fourth year, Smith said.

HHS isn’t likely to provide interim guidance for those plans until at least March or April. Then states must go through their own budgetary processes, which typically takes months, she said. States will also have to figure out within three years how to assure a “living wage” for child care workers, who currently are paid less on average than retail and warehouse workers.

Some states will probably take two years just to submit those plans, said Smith, now director of the early childhood initiative at the Bipartisan Policy Center. And states can choose not to participate, an option a number of Republican-controlled states took to stay out of Obamacare’s Medicaid expansions.

Then there is the challenge of ramping up the child care sector, where providers often have long wait lists for openings. A Bipartisan Policy Center analysis of 35 states found spots at legally operating centers were 31% short of demand even before the pandemic, which has worsened the crunch.

The fine print in the legislation makes concessions to those challenges. There’s a three-year phase-in period, initially limiting eligibility to lower-income families and dividing funding between direct subsidies for day care slots and assistance to expand child care facilities and build up state administrative support. It won’t be until October 2024, a month before the presidential election, that the program is supposed to open to all eligible families.

Even that timetable is “very aggressive,” Smith said.

The White House is more optimistic, saying the Department of Health and Human Services will simplify the application process to avoid delays in the first year.

“They will be able to fill out a streamlined, transitional application and build on their existing child care infrastructure so that they can get funds out quickly,” White House spokesperson Emilie Simons said.

And parents are likely to see more child care centers open and others add spaces next year, in part because of grants distributed under the earlier Covid relief package, according to Anne Hedgepeth, government affairs director for Child Care Aware of America, an advocacy group.

The desire to return to pre-pandemic life could also speed things along.

Rasheed Malik, director of early childhood policy at Center for American Progress, a Democratic think tank with close ties to the Biden White House, said he expects many states to supersede past timelines.

“They got a fire lit under them” due to the pandemic, Malik said. “Everyone is eager to get past this and we know child care is an impediment to getting back to a stable labor force.”

Home health

Similar obstacles await Biden’s plan to open more home health options for families caring for elderly or disabled members. Complicating matters, however, is the funding for home health care was cut to $150 billion from the $400 billion the White House originally sought.

An estimated 820,000 Americans sit on the Medicaid wait lists for home and community-based care, according to the Kaiser Family Foundation in a 2020 report.

Demand for home care is expected to create more than a million new positions by 2030, more than any other profession, according to the Bureau for Labor Statistics.

One in five American adults say they or a family member need new or additional support from paid nurses or aides beyond what they’re getting — and the most common reason is cost, according to a Kaiser Family Foundation poll conducted in September and October. But nearly half of people polled said they also could not find someone to provide services.

Advocates consider the money in the legislation a first step but acknowledge it won’t eliminate wait lists.

States that choose to participate in the program would write their own plan to expand home care, including recruitment incentives like increased pay in a field where the median pay is $13.02 per hour for aides.

The Centers for Medicare and Medicaid Services must approve the plans and states must start implementation before they could claim funding, said Darby Anderson, vice chair for the Partnership for Medicaid Home Based Care.

“These tasks would be difficult to accomplish before 2023 or 2024,” he said.

In the meantime, states can access money in the American Rescue Plan, which included a 10% additional federal match for states to pay for home-based care.

“It’s certainly going to do more than any other administration has ever done, but at the same time, it’s a drop in the bucket,” Anderson said.

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