Re-Thinking Dependent Care Options: Full Report

Abstract

Challenges in getting access to and paying for dependent care are reported to be the biggest barriers for people wanting to enter or stay in the labor force. Poverty, economic insecurity, low workforce productivity, poor staff attraction and retention, reduced economic activity and lower tax revenues are some of the byproducts of issues with securing dependent care. Such services are often expensive and in short supply, in large part, due to unsustainable business models that discourage market entry and drive providers out of business.

Most providers operate on thin or inexistent margins mainly due to the high costs associated with regulatory compliance and staff salaries, even though dependent care workers make poverty wages. Providers also receive inadequate reimbursement rates and are unable to charge higher service fees due to working families’ inability to pay more for care that is already expensive. These issues have been exacerbated by the financial strain of COVID-19 closures, which may lead West Virginia to lose 56 percent of its child care slots. While there are no single, easy answers to a more effective provision of dependent care services in rural settings, finding a first phase set of potential solutions is important for children, working families, providers, businesses and the economy as a whole.

This paper offers policy considerations and innovative business models ideas to help dependent care providers stay in business and meet the needs of working families in West Virginia. Key proposed models and solutions include shared services, intergenerational care, sharing economy, leadership training and a first-phase cost calculator tool for child care businesses. To better support providers, the state can also consider regulating Adult Day Services (ADS) through a social or hybrid model, developing a waiver program for ADS, safely removing or revisiting overly burdensome regulations for child care businesses or increasing as well as calculating reimbursement rates based on enrollment.

This analysis is not advocating for the deregulation of child and adult care services as a means to decrease startup and operational costs. Regulations are essential and put into place to ensure the safety and wellbeing of child and adult care program participants. Yet, it is important to revisit and potentially remove regulations that are not in line with best practices and successful models of care.