December 8, 2021
Nine ways the Build Back Better Act would change how Americans live their lives
The Build Back Better Act (BBBA) is making its way through Congress and stands a good chance of being passed in some form. If approved, this bill would dramatically alter how Americans live their lives and would fundamentally change the relationship between states and the federal government.
Based on analysis from Network experts, these are the top nine ways the bill would affect states and their citizens.
There are currently 12 states that have not expanded Medicaid coverage. Their reasons range from reasonable doubts about the federal government’s ability to provide quality individual healthcare to beliefs that other more innovative solutions are needed to ensure access to quality healthcare. Unfortunately, under the BBBA, each of these states would have no choice but to expand Medicaid.
Under the BBBA, the federal government would attempt to fix what they see as a “coverage gap,” by providing coverage for anyone who would be covered if their state expanded Medicaid. They will do so by providing direct subsidies to private insurance companies to insure those within the gap. Not only would this result in the federal government picking winners and losers in the insurance marketplace, but it could also result in higher premiums for those whose healthcare isn’t subsidized. Most damaging of all, this would erode states’ and communities’ authority to choose the healthcare solutions that are best for their citizens
Not only could the BBBA make healthcare more expensive for non-subsidized individuals, but it could make healthcare harder to access for the most vulnerable. One of the most damaging provisions of the plan is a reduction in Dish Payments. Dish Payments are payments made directly to hospitals for treating people who don’t have insurance. By cutting Dish Payments, either hospitals would take on extra costs for treating uninsured people, or states would have to foot the bill for individuals the federal government has abandoned.
Furthermore, the BBBA raises the standards a state must meet to apply for a Section 1115 Medicaid Waiver. A Section 1115 Medicaid Waiver—also considered a healthcare innovation waiver—allows a state to not contribute to Medicaid costs and to instead fund other solutions for ensuring quality healthcare for its citizens. By changing the requirements for states to get these waivers, the federal government will make it harder for states to fund innovations in healthcare. Instead, each state’s healthcare system would stagnate, only allowing what the federal government deemed acceptable under Medicaid.
While there’s always danger in a top-down approach to problem solving, perhaps the biggest danger of the BBBA is its vagueness on long-term costs. The Act provides massive funding up front, but it makes no guarantees beyond 2027. Short-term funding for a program is often a political ploy to get more funding for that same program in the future, turning it from a temporary fix to a permanent cost. So, it’s likely that these programs will either become permanent federal expenditures or bills that states will have to figure out how to pay in full after 2027.
Could the programs simply end after 2027? That’s not how our country tends to work. Medicaid expansion often includes “maintenance of effort” requirements, which are also part of the BBBA. Under these requirements, to remove someone from Medicaid rolls it must be proven that they have income above Medicaid levels, and that they’ve received Medicaid coverage for at least 12 months. While this might not seem that onerous, it results in very few people getting off Medicaid once they’re on. For instance, Ohio has seen over a 500,000 person increase in their Medicaid enrollment since February of 2020, which has not decreased despite their employment numbers getting closer and closer to pre-pandemic levels.
Very few people would argue against childcare assistance for low-income families. Unfortunately, the BBBA doesn’t focus its assistance on low-income families; instead, it expands the federal government’s role in childcare for practically all Americans. The bill initially offers childcare to families making less than 150% of the median income, and by 2027 it raises the qualification standard to 200% of the median income. Let’s take a look at some examples of how this breaks down:
So, the BBBA is really a childcare-for-all act. It might be an appealing solution to some, but the Act's expansiveness would result in a crowded market with lower quality childcare for all, especially for low income families. It also precludes many of the exact types of childcare that low-income families most prefer.
A stated goal of the BBBA is to provide “top tier” childcare for all children by 2027 through direct subsidizing of childcare costs and numerous regulations designed to improve quality. While some regulations are appropriate to preserve the health and well-being of children, there is too much evidence that overregulation is dangerous in all markets, especially the childcare market.
The city of Chicago and the state of New Jersey are real-life examples of the downsides of such regulations. Rather than resulting in increased quality, they mostly limit access. “Quality” based regulations are highly preferential towards center-based childcare because it’s easier to regulate than home-based providers. Unfortunately, the vast majority of low-income families prefer home-based care, which offers the peace of mind that comes from knowing caregivers personally and getting more personal care and attention for children. In New Jersey and Chicago, the regulations caused many home-based operations to close and forced low-income families into center-based care.
The BBBA has a notable bias towards center-based care. It’s easier to regulate and is the preferred childcare offering for wealthy Americans, including the politicians who have crafted this bill. It's a mistake for politicians in Washington, DC to think they know the preferences of all Americans. But, even beyond this, one of the most damaging elements of the BBBA is its precluding of many faith-based childcare providers. Many families that do choose center-based care prefer faith-based providers—ones often run by a church or organization the family knows personally and where they find common ground in their values. The BBBA’s regulations almost completely remove the option to choose a faith-based childcare center.
There are better ways to meet the childcare needs of Americans. First and foremost, childcare solutions should be locally organized to avoid the rigid top-down rules of federal policy. Local leaders would be better equipped to create opportunities for the childcare options their constituents want, instead of these families being forced into the same childcare preferences of political elites living in the city with the highest median income.
Beyond that, the resourcefulness of parents and communities should not be underestimated. During the COVID-19 pandemic, parents found all sorts of innovative and cost-effective means of providing childcare, including childcare co-ops, which are similar microschools. States and municipalities can support parents by revisiting their regulations and removing barriers to community-based solutions so that they aren’t impeding cost-effective options that make quality childcare options more accessible for all.
As with childcare, many people would agree with the goals of the BBBA when it comes to Home Care Providers. The elderly, disabled, and the disadvantaged should be able to access home care providers, and those providers should be able to safely earn a good living. The best way to accomplish this is with community-based models, which lower the costs by keeping services close to home and making sure those who need care can stay in their hometowns to get it.
Unfortunately, the BBBA misses the mark on this front. It suggests a focus on expanding home care through community-based models but ultimately sets the stage for a top-town regulatory environment. This regulatory environment does far more to empower and favor well-connected unions than it does to encourage and promote community-based home care.
To signal that the BBBA leaves home care up to communities, the Act makes following most of its home care regulations optional. But, it ties a significant portion of new Medicaid funding to following BBBA regulations. These regulations include new standards for a provider to qualify for Medicaid funds, new training requirements, and regularly scheduled payment increases to be negotiated with substantial input from labor unions.
This situation is almost exactly what happened in Washington state. Washington’s similar policies empowered unions to control training requirements, provider qualification standards, and even the means of potential clients finding providers. It’s a lot like when your health insurance only lets you shop in-network. The results? Higher costs, not better care. Since Washington adopted similar policies, they have seen a 15% cost increase for home care services every two years. Rather than going toward wages for providers, that money is funding union operating costs due to an expansion of the Dues Skim.
The way that both the BBBA and the Washington state policies are written allow for “private” employers to contract with the state directly. This was done so that unions could avoid Janus v. AFSCME requirements, which instruct unions to disclose that members can opt out of paying union dues. If it’s not a “public” employer, but rather a “private” contract, there are fewer requirements for educating employees about their First Amendment rights.
Rather than protecting care providers, the BBBA empowers unions to keep skimming money off of home care providers’ hard-earned paychecks. It’s simply a legal workaround to nationalize a corrupt model that, until now, was isolated to Washington state.
Ranking and Analysis of States Based on Post-Pandemic Job Recovery (State Policy Network)
Protect Home Healthcare Providers: End Dues Skimming (State Policy Network)
Protect Childcare Providers (State Policy Network)
Report: Treasury Guidance on the American Rescue Plan Act Leaves Room for State Tax Reform (State Policy Network)
America Needs a Great Decentralization (National Review)
New Child Care Subsidies May Sound Great, But Will Families Be Able to Use Them? (Heritage Foundation)
Stop the Spread: How the BBBA Seeks to Replicate Washington State’s Union-Dominated HCBS Model Nationwide (Freedom Foundation)
The Hidden Costs of Budget Gimmicks (House Republican Policy Committee)
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