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The Cost of Subsidized Child Care: 2005-2016

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This research brief presents findings using national data from child care subsidy administrative records that states submit to the U.S. Department of Health and Human Services (HHS). The analysis shows that a greater percentage of subsidized care occurred in licensed child care centers in FY 2016 than in FY 2005. Children were less likely to receive care in family care settings or in their own homes. The amount paid to providers through subsidies and copayments increased more than inflation for the overall economy and the increases in the amount paid to child care providers occurred across age groups as well as type of care arrangement. The percentage of families making copayments increased somewhat, but copayments as a proportion of total payments to providers were similar in 2016 to what they were in 2005. In general, copayments paid by participating families increased at about the same rate as subsidy payments. These results suggest that states have reacted to the rising costs of child care through a combination of higher subsidy payments and increases in copayments.

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