Some Investments Pay for Themselves: Medicaid & Child Care Help All Kentuckians Thrive

It’s that time of every-other-year again: Kentucky’s General Assembly is working on the state’s budget. Advocates, policy analysts, lobbyists and constituents will fill the halls of Frankfort until mid-April, working to see their priorities get funded. What’s different this year is that there’s more than enough to go around – an unprecedented $3.7 billion – to fund policies and programs that help all Kentuckians thrive. After two decades of recession, inflation, economic hit after economic hit – it’s a refreshing reality. 

We deserve to see this surplus used wisely, not set aside. It’s time for Kentucky to invest in itself. From clean drinking water to better roads, addressing substance use and investing in education, affordable housing and disaster recovery, there are many priorities in need of investment to help ensure a healthier, more vibrant future for Kentucky. Every family and local economy in KY benefits from a strong healthcare safety-net and child care industry.

We deserve to see this surplus used wisely, not set aside. It’s time for Kentucky to invest in itself.

By fully funding Medicaid, lawmakers will support Kentucky’s hospitals, local economies, healthcare workforce, and 1 in 3 Kentuckians who use Medicaid for their healthcare, including over 650,000 children. Policymakers have made smart, upstream Medicaid investments in recent years: hospital incentives for improved health outcomes, reimbursement for Certified Community Health Workers, 12-months of postpartum coverage, better rates for Home and Community Based Services (HCBS) providers, supported employment and housing for those with Serious Mental Illness (SMI), and healthy reentry supports for Kentuckians leaving incarceration. 

These policies are moving Kentucky’s needle in a healthier direction. Since Medicaid’s expansion in 2014, Kentucky has been rising steadily in America’s Health Rankings, and fully funding Medicaid means continuing our upward trajectory towards better health. Cuts to Medicaid funding wouldn’t just harm low-income families, it would mean jeopardizing federal matching dollars (roughly 80 cents for every 20 cents the state spends). That weakens our entire healthcare system, reducing access to care for every Kentuckian. To improve health outcomes and economic prospects of Kentuckians, Medicaid is one of Kentucky’s best investments.

Policymakers have made smart, upstream investments in recent years…
And they are moving Kentucky’s needle in a healthier direction.

Another bright spot for families and children, Kentucky recently became a national leader – literally #1 – for innovative investments in the Child Care Assistance Program (CCAP). For the first time, child care workers became eligible to participate in CCAP, enabling more than 5,000 children to remain in child care and more than 3,000 child care workers to continue working. With less than 13,000 Kentucky child care workers across the commonwealth, this investment likely saved our child care industry from completely crumbling under the economic pressures of the pandemic. 

But Kentucky’s child care industry was struggling even before COVID-19. In the span of a decade, Kentucky lost 46% of our child care providers, a precipitous slide that only stabilized with an infusion of a billion dollars in federal pandemic aid. In our survey of nearly 800 child care centers, a majority indicated that without CCAP improvements and relief payments from the American Rescue Plan Act (ARPA), they would have likely closed in the past two years. 1 in 4 still face that uncertainty. 

Stabilization payments that allowed child care providers to increase wages and make facility investments have already ended and the remaining enhanced federal funds expire in September. What happens if we get to September’s funding cliff without sufficient investment from the state? Upwards of 554 child care programs could close, 41,000 children lose their daycare slot, and $92M in family earnings would be lost from parents cutting hours or leaving the workforce altogether. Lawmakers must answer the urgent need to maintain our child care capacity at $330M per year. 

Child care is the industry that supports all industries.
Lawmakers must answer the urgent need to maintain our child care capacity at $330M per year.

Child care is the industry that supports all industries. If we ever want to expand capacity to serve thousands of families on waiting lists for a spot and meet workforce demands for safe, high quality child care, more will be needed. But, investing in the livelihoods of families with children is worth it. In real dollars and “sense” – for every $1 dollar invested in child care, $4-$9 are returned to the economy. Significant need, meet significant investment. Significant investment, meet significant return.

Kentucky is at a crossroads. We’ve witnessed historic economic growth, but not every sector or region has kept pace with that growth. Amid egregious inflation and spiraling costs, not every family has seen that growth trickle down into their pocketbooks. Kentucky still faces troubling shortages among nurses, teachers, child care, affordable housing, and mental healthcare. Thousands of vulnerable children and adults with disabilities remain on years-long HCBS waiting lists they need to live. Fully funding Medicaid, expanding waiver slots, investing $330M per year in child care, creating refundable tax credits for moms and babies…  all of this and more is achievable in 2024’s budget. Our children, our families, and our economy cannot afford to wait.