Napoleon said, “Never interrupt your enemy when he makes a mistake”, but I cannot resist.
Congressional progressives plan to pass massive childcare subsidy scheme under the “Build Back Better” human infrastructure program, but unfortunately this subsidy scheme is a cut and paste of another poorly designed program: Obamacare.
This will be a mistake because, like Obamacare did for Medicare, it will end up increasing the cost of child care and hurting many American families. It will also create other unintended consequences on the quality and availability of child care.
How does the proposed childcare support structure work? This is central planning at its best: Government planners have decided how much of Americans’ income we should spend on child care. After this limit, which is 7 percent for families earning 150 percent of the federal poverty line or more, the government steps in to pay the additional costs.
Anyone who knows the Obamacare health insurance scholarships knows that the government has set a maximum that subsidized clients can pay for their premiums: 8.5% of their income.
You almost have to wonder what the next step is: will the government step in to tell me how much of my income I can spend on housing? Transport? Food? The whole premise is stupid; things cost what they cost. And government grants don’t change that.
Or do they do it? Government grants can actually increase the cost of anything that is subsidized, as they distort market signals by funneling more and more money into health care, colleges, and perhaps now day care centers. Grants change who pay.
Like Peter Nelson recently wrote about the Affordable Care Act Grants“With premium increases funded entirely by government grants, issuers have little incentive to control premium growth. ”
But demand-side subsidies for child care aren’t the only way the government can increase costs. The child care plan will increase the salaries of educators to match what elementary teachers earn. No matter what you think about it (whether it is deserved or not), it will increase the cost of child care. A lot. Much like Obamacare has increased the costs of health insurance. A lot.
Unfortunately, the child care plan currently under review copies another design flaw of Obamacare, at least in its deployment: Many families will be ineligible for grants entirely before 2025. That means many families could face a $ 13,000 increase in child care costs under this plan.
This number comes from an analysis of Popular policy project, a group that criticizes the care plan because it is not progressive quite in their opinion. To continue the analogy with health care reform, it would be like people who want Medicare for All instead of Obamacare.
Conclusion: Instead of establishing a truly universal government-run child care system or going the other way and making the private child care market more competitive and affordable, the proposal currently being submitted in Congress superimposes subsidies and complicated government requirements on the existing system. It will dramatically increase the cost of childcare, but promises to distribute sliding scale grants to some people, in the future. Seems familiar?
And just as the Culture Wars followed Obamacare (about birth control coverage, for example), the Culture Wars will follow this proposal for childcare, right down to the classrooms where younger Americans are expected to learn. their numbers and colors.
This is because when government funding is involved, government rules and requirements come into play. It is absurd to think that 330 million Americans would all agree on what should be covered by an insurance policy. sickness. Likewise, it is absurd to think that we want the same type of child care for our children.
Today, many Americans have resigned themselves to living with Obamacare and whatever costs come with it. Maybe that’s because they don’t see some of the behind-the-scenes issues Americans face in the individual (rather than job-based) insurance market in the exchanges.
Insurers, in response to Obamacare’s restrictions on premium pricing, have created plans with higher cost sharing and tighter networks. What good is it for parents to have lower child care costs if there are no child care centers open within an 80 km radius? Or what if these daycares have 24-month waiting lists to enroll a child in a classroom? Market realities have a way of surfacing, if not through higher prices to consumers, other unpleasant ways, such as implicit rationing.
And once the government gets involved in subsidizing something, it’s never enough. Even now, as part of the Build Back Better plan, lawmakers are seeking to make the pandemic-induced “enhanced” Obamacare subsidies permanent. Just as Obamacare was a messy step towards single-payer healthcare, we can expect today’s childcare proposal to follow a similar path.
We shouldn’t be going down this road. Obamacare had its merits, but Americans surely recognize that the promise to lower health insurance premiums has been broken and the opposite has happened. The real mistake here would be to trust the same people with the child care system now.
Hadley heath manning is Policy Director for Independent Women’s Forum (www.iwf.org).