Opinion: Is Paying Parents to Stay Home With Their Infants A Policy Worth Reviving?

A version of this Q&A originally appeared on Elliot Haspel’s Substack The Family Frontier .

You know that trope where a character on TV or film is rifling through some old files and just happens upon one that is exceptionally relevant to their present situation? Well, sometimes that happens in public policy too; not so much the random rifling, but a reach-back into policy history which can uncover important ideas that fell away, yet are now ripe for adapting to today’s context.

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So it is, I believe, with At-Home Infant Care programs, or AHICs. At a time when support for parental care is suddenly a hot topic, I’m grateful to Josh McCabe and Sanya Bahal at the Niskanen Center for writing a new report, “ Bridging the Infant Care Gap: Reviving America’s At-Home Infant Care Programs .” The idea behind AHICs, piloted in Minnesota and Montana in the early 2000s, is simple: as McCabe and Bahal explain, they “allowed low-income parents, who would otherwise be eligible for state childcare subsidies, to receive time-limited state payments to stay home with their newborn.” I’ve been interested in the AHIC model for years, but until now detailed information about them has been hard to find. AHICs address three simultaneous challenges: most parents want to be at home caring for their infants during the first year of life; infant care is extraordinarily expensive and difficult to provide in licensed settings (due primarily to the need for very low adult-to-child ratios); and because of the high per-child cost, infant subsidies can be a drain on already-pinched state childcare budgets.

Because I know it can be tough to find the time to read policy reports these days, I thought it would be helpful to toss some questions the authors’ way in a Q&A style: Bahal generously offered to respond.

As a bit more context: The AHIC pilots went well on the ground, but they petered out mostly due to a lack of sustainable funding. McCabe and Bahal have put together a creative case for how to fund them by tapping into unused Temporary Assistance for Needy Families (TANF) dollars, and how states can update the AHIC model for the 2020s such that they are also available to middle-income households. No proposal is perfect, but I think this is a worthy contribution to the childcare policy conversation and deserves a serious look by state legislators as well as Congress as one piece of a family policy ecosystem. As Bahal says below, AHICs aren’t really paid family leave and they aren’t really childcare subsidies; instead, they address what’s currently a gap. It’s worth saying that AHICs have never been particularly partisan; Republican state legislators were involved in Minnesota and Montana, while in 2004 Democratic Rep. Rosa DeLauro and Democratic Sen. Max Baucus introduced bills to support AHICs.

With that preamble, here’s my written conversation with Sanya Bahal:

I’ve been interested in AHICs for a few years, but outside of a few of us wonks, the pilots seemed destined for the dustbin of policy history until you and Josh resurrected them. What made you want to take the time to put together this report?

The idea was simple: All parents should have the flexibility to stay home to care for their infant, if they wish to do so. The fact of the matter is that there are many parents out there who want to stay home during those initial months after their baby is born but are not able to because they simply cannot afford it. The timing felt right, too. Paid family leave is on the march across states, which is great. But as our report highlighted a couple of years ago , even the best-designed paid leave programs will still leave some new parents out. That same report also made the case that we could draw lessons from history and other countries to fill those gaps. AHIC was one of those lessons.

This is something we do a lot at Niskanen. We love finding unique solutions that have already worked historically, or somewhere else and we’ve seen success with this model. For example, in a report last year , we talked about the idea of a baby bonus modeled on Australia’s program, and that idea is now a bill in Congress. We took the same approach here. Minnesota and Montana already tried AHIC, and we know it worked. Parents loved it, and it saved states money. It only fell apart because states couldn’t find a stable way to pay for it. So our goal wasn’t to reinvent the idea. It was to find the policy tweaks that can make it financially sustainable now. And with at-home care becoming such a big part of the political conversation, we thought this was the moment to bring it back.

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Probably the top pushback on this sort of idea is that it could be seen as a replacement for, or otherwise supplant, paid family leave and efforts to expand PFL. Can you describe how you think about the interaction between AHICs and paid family leave, and how you would respond to a policymaker who had that concern?

We gave this concern a lot of thought when analyzing how AHIC would interact with the current childcare and parental leave policy landscape. What we concluded was that AHIC is not a substitution but a complement for state parental leave. Ideally, state policymakers would expand access to paid parental leave as part of a broader strategy to allow parents to stay home with their infants. That’s the goal. The problem is that even where we have paid leave, it’s still a patchwork here in the U.S. It varies by state and by employer. Only about a third of workers have access to paid parental leave through their state programs, and about a fourth have access through their employer. The key point is that even the best designed paid leave programs would leave some families out. Our own analysis estimates that about a quarter of working-age residents of states with comprehensive paid leave programs wouldn’t be eligible for benefits.

So what happens to those parents? They often turn to state welfare programs. In fact, mothers of newborns account for about one-third of all new TANF entrants. But traditional TANF was never meant to be a program for supporting new parents. So there’s a real gap there, and it points to the need for a broader, more diverse set of policies to support new parents and infants alike. That’s where AHIC comes in. Minnesota and Montana have experimented with the program and shown promising results, but they sputtered out because of a lack of stable funding. Reviving them could be the key to offering new parents an alternative to going on welfare. So I’d say AHIC isn’t paid leave or a childcare [subsidy]. Paid leave should be the foundation for caring for infants at home, and AHIC catches the families that paid leave, by design, is going to miss.

Talk a bit about how you see eligibility for AHICs working? Since you’re proposing tapping TANF dollars to pay for it, I think many people’s minds will first go to the idea that this is only for very low-income families, since at least in the popular imagination TANF is primarily a program for that group. In other words, could middle-class families benefit from an AHIC program, too?

That is an understandable assumption and that’s why it’s important to separate where the money comes from and who’s actually eligible. TANF is the funding vehicle for AHIC, not the eligibility test. Under our proposal, states could set work activity and income eligibility as they do for their childcare subsidy programs. Those limits reach much further up the income ladder than people usually think. Income eligibility for existing childcare subsidies ranges from 30% of the state median income in Georgia to no income cap in New Mexico. A couple of other states are well above the median too. So in a lot of states, AHIC programs would be broadly inclusive of working families, not just the families people picture when they hear “TANF.”

We actually have evidence on this from when Minnesota implemented its AHIC program. Ninety-four percent were working before they joined the program. That’s who this really is for: working parents who don’t have access to paid leave and would otherwise face pressure to put their baby in childcare. State choices determine how far up the income ladder can families benefit from the program. In a state with a low childcare subsidy limit, it’ll mostly reach lower-income families but in states with more generous limits, middle-income working families could absolutely benefit.

Do you have any estimates of how many families could be served via AHICs by states tapping TANF funds? And any estimates about how much money, on average, a participating family might expect to see per month? And, along those lines, how should people think about AHICs within the broader ecosystem of childcare policy and the various proposals on both the political left and right for reform?

On the number of families, it really depends on how each state designs its program: where it sets its income limits, how long do benefits last and how much it pays. So I’d be cautious about putting a single national number on it. What I can say is that the money is there. States have accumulated almost $10 billion in unspent TANF reserves in recent years, which makes the TANF block grant a prime opportunity for funding AHIC. On how much families would get, we recommend that states set the maximum AHIC benefit as a proportion of their existing center-based infant care subsidies. In every state except Wyoming, these subsidies are significantly higher than the maximum TANF benefit a family can receive.

Setting benefits this way accomplishes both of the program’s goals. The main goal is to give new parents who don’t have access to paid leave an alternative to TANF to care for their infant at home, and the second is to save states money on infant childcare subsidies. For example, if Utah were to provide up to 75% of its childcare subsidy amount as an AHIC benefit, a family would receive a monthly benefit of up to $923, about $392 more than they would receive in TANF benefits. As a result, parents would receive a higher benefit, while the state could spend approximately $308 per month less per family than it would on the full childcare subsidy. We saw that dynamic play out in Minnesota too.

As for where AHIC fits in the bigger picture, I’d say it’s a building block, not a competitor to other proposals. There’s a growing recognition of a mismatch between what parents want for their infants and the support the current system offers them. This recognition spans across both sides of the aisle. Even if stakeholders disagree about care options for older kids, there is broad consensus among stakeholders that infants should definitely be at home with parents. AHIC enables that. As mentioned earlier, infant care is so expensive for center-based providers that they often call it a “loss leader.” To the extent policy can shift infants to other care options, it reduces pressure on providers and frees up capacity for other age groups.

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What would need to happen, policywise, for states to actually stand up AHIC programs? And, along those lines, would the federal government or Congress need to take any actions, or could states do this on their own?