Throwing $2000 at new parents isn’t nearly enough—in fact it’s insulting. If a woman has a C section and the baby spends even a few days in NICU, you are talking more than $2000 out of pocket-you are talking hitting your out of pocket limit, and given how many employers are forcing people into high deductible plans, that can be more like $15,000 because being a combination of mom and baby, you have to hit your family out of pocket—not just the amount for mom.
Then there is the issue of income loss during parental leave. Daycare expense if the parents plan to return to work. And yeah, car seats, strollers, and all the other routine expenses.
If you want to remove the financial penalty that parents suffer, insist on parity between contraceptive coverage and prenatal/childbirth coverage. The ACA mandates that birth control be covered without any out of pocket—-e.g. free to the insured—if it’s free NOT to have a kid, it should be free to have a kid. Maybe the Feds could reimburse the insurance companies if it’s financially ruinous to them to provide this benefit. Or put all pregnant women on Medicaid and mandate that health care providers accept Medicaid for pregnant patients. Lots of ways to skin this cat.
I still think the most elegant solution to addressing the financial penalty that is parenting was proposed by former Senator Mitt Romney—take a look at his child tax credit proposal. It started in the second trimester of pregnancy, and I think it covered kids until age 6 or so—-about the time they are in school full time. It was enough to give almost all families a real choice as to whether to pay for decent child care or have one parent opt out of paid work. Having done both (worked full time with a baby under age 1 and stayed home full time after the second kid) I believe the key to unlocking this problem of people not being able to have the children they want is to enable families to choose to do their own childcare or hire childcare. If you are a high earner and love your job, the difference between day care and a nanny might be covered by a tax credit. If you are a low paid Amazon worker, the child tax credit provides income replacement giving you the choice as to whether to return to work or not.
We spend untold trillions on seniors and paltry sums on the future taxpayers of this country. Maybe rebalance the scales and give younger people a hand, and increase taxes on capital gains and on high earners Social Security benefits to pay for it.
> The ACA mandates that birth control be covered without any out of pocket—-e.g. free to the insured—if it’s free NOT to have a kid, it should be free to have a kid. Maybe the Feds could reimburse the insurance companies if it’s financially ruinous to them to provide this benefit. Or put all pregnant women on Medicaid and mandate that health care providers accept Medicaid for pregnant patients.
This kind of adjustment doesn't make birth free, though it does spread the burden more to non-parents through either increased premiums or increased taxes.
Because 42% of births are already free (the moms who are on Medicaid), I prefer a baby bonus to making the rest of them free. Making birth free would help *me* but exclude that vulnerable 42% from any additional benefit.
The people covered by Medicaid are already getting the benefit of no out of pocket expenses for prenatal care and childbirth. Why not make that a universal benefit? It makes more sense than an arbitrary stipend. If you have no complication and a midwife attends your home birth, your cost is going to be a lot different than if you end up in premature labor, have a C section, and your baby ends up in NICU for a week. If you hand each family $10,000 the one that had the home birth is ahead and the one with the preemie is still in a financial hole while having to care for a fragile baby.
The focus of my day job is on what near-term wins are possible for families. There's no appetite or budget room for $10k per baby this year.
If you were targetting the average out of pocket cost for delivery for parents who pay anything, you'd be at $3k, not so far off from the bonus number. The out of pocket is what matters, the bill numbers are made up.
>Costs for pregnancies resulting in a vaginal delivery average $14,768 ($2,655 of which is paid out-of-pocket) and those resulting in cesarean section (C-section) average $26,280 ($3,214 of which is paid out-of-pocket).
To even hope to change behavior, you have to remove the financial disincentives for having kids. $2000 won’t change behavior-it will just throw money at people who would have had kids anyway, so you are really just wasting money.
Bill numbers may be made up, but people are still legally obligated to pay the bills that they incur. Everybody hates insurance companies, so there may be a possible solution here by arguing basic fairness—why should family A be stuck with a bill for $10,000 because of bad luck (having a C section and having a high deductible insurance plan) while family B only has to pay $2655 (having normal insurance and a vaginal birth). Really—take a look at insurance parity as one way to address helping new parents get back on their feet after childbirth.
I agree that the high prices can't shape patient behavior as they do for elective work. I'm pretty pro a cap on max childbirth costs, I'm just not convinced the cap should be $0.
Any extra $, even if one-time, can throw someone off Medicaid, which has a very low cutoff point for income and assets. It could be very tricky to set up a baby bonus that was neither taxable as income, nor throwing recipients off Medicaid. Medicaid eligibility is handled through a different office than the IRS, and even within agencies, keeping information current has many glitches.
Mitt Romney's proposal does look better. BTW, tho, I don't agree that help for parents and kids should come at the expense of care for Seniors. Medicare isn't free, and earning a bit more than a minimum can double medical expenses for people on Medicare. I'd favor Trump's idea of not taxing Social Security once income hits a relatively low amount. More Seniors live on the edge of poverty than you may realize, and those who have higher Social Security incomes have earned it.
A mix of both! I've heard good faith concern about stacking too much ($5k bonus + CTC + EITC) for low income families in a way that would genuinely crowd out work.
The reconciliation bill has very little space for new provisions, so a lower number has a chance of inclusion without breaking the budget.
Some of people's questions about ideal size for a bonus are best answered by passing one and returning to the topic in ~5 years, when you've run difference in difference studies.
Hi Leah! Thanks so much for this take. I’m an American who lives in Norway (here because my husband is Norwegian) and I’ve had both of my kids here so I’m the beneficiary of all of the excellent family policies here. While I prickle at the framing of a $5K “baby bonus” as an incentive to have more babies (especially in a country that no longer guarantees reproductive freedom) I also believe that introducing this policy could be an important stepping stone to building up more structural support for parents in the United States. I completely agree with many who say that $5K isn’t nearly enough, but for a lot of lower and middle income families, it could make a huge difference, as you point out, and is maybe a good place to start.
I was wondering what you think about, as an alternative to a one-time payout, monthly payments instead? In Norway we have something called “barnetrygd” which is a monthly child benefit payment automatically paid to families each month. This policy was first introduced in 1946 as a small amount to compensate mothers for childcare at home and has gradually increased over time. The amount just went up again in May, and is now about $190 per child per month, regardless of the family’s income. (Interestingly, I have heard that the decision to give the same amount to all households was for the sake of efficiency; apparently it costs more to employ a bunch of people to sort out different amounts based on income rather than just give them same to everyone.)
This money gets directly deposited into the mother’s bank account each month, starting from the month a child is born and until they are 18, and is tax-free income. Over 18 years, this adds up to about $40,000.
I know this is more than the U.S. would probably be willing to provide (at least now) but I wonder what you think about this as an alternative model, and if you know of any similar policies that have been proposed in the U.S.?
I think a monthly payment is a non-starter in a Republican trifecta (where the Republican party controls both houses of Congress and the presidency). Monthly payments definitely raise anti-welfare hackles in the Republican Party, and tend to sound more disconnected from tax policy.
The child tax credit, paid out once yearly, isn't as far off from the barnetrygd as you might expect. The $2000 credit is worth $32k over the range of a child's life (it's paid out until the kid turns 17). But it's important to keeping it bipartisan that it isn't monthly.
Hi Leah! I'd be really interested in hearing you interact with my colleague Len Lopoo's op-ed in the Wall Street Journal this week. I don't expect you agree with him but would love your thoughts.
Ok, so obviously I disagree about the ethics of IVF tout court, but for folks who are open to it...
I think he's making my case for me in this graf:
"Baby bonuses work the same way. A small financial incentive may convince a couple to have a child earlier than originally planned, even if the offer isn’t time limited as in the housing example. But that’s it. When naive analysts look at the data and observe a rise in childbearing after such a subsidy is introduced, they are often seeing this temporary speedup in family planning. The government ends up paying for children who were already going to be born absent the baby bonus policy. But the Trump administration doesn’t want a short-lived acceleration of already inbound births."
Having intended births happen a little earlier is great!
-it opens up a chance at a second or third kid who might have been harder to achieve if your first came later.
-it means you get MORE YEARS WITH YOUR CHILD. If both IVF and baby bonuses did not increase the fertility rate but just shifted kids forward and back, then baby bonuses would be clearly superior
Neither IVF subsidy nor baby bonus is likely to produce a huge boost to fertility. But helping people have kids earlier is more pro-family than focusing on the back end. (And having kids earlier is itself a way of decreasing the odds of derailment by infertility)
Thinking about how a $2,000 baby bonus would affect women in different circumstances, I couldn't help but slide into thinking about other countries that offer such magnificent support for parents. So I fantasized briefly about $2,000 covering a passport and airfare and visa to a better country....I wonder if women and couples are starting to consider this when pregnancy occurs -- or even when they're considering having a baby -- even if they don't have remote jobs that don't require their frequent presence in the United States. Parental leave? Child care? Free medical care and free college and graduate education even for non-citizens?
Great suggestions, Leah. However, I think we are past this stage at this point. What this will result in is further creating kids without fathers. We are at this stage because of how certain things are incentivized and $2,000 will just add to that incentives. What is hard for everyone to grasp today is you have to incentivize the majority of men to the whole baby industry. Without changing divorce policies, alimony laws and policies that men see as risk to getting into the baby making industry, most other measures will only further incentivize bad behavior.
I think people certainly fool around outside of marriage already, and it's the sex, not the possibility of a CTC or baby bonus that is the main draw. And I don't want women who get pregnant out of wedlock to fear immiseration—then the obvious solution is abortion.
Thank you for your response. "And I don't want women who get pregnant out of wedlock to fear immiseration" but the data already shows that this is the case for a lot of men. I'm all for your suggestion here to encourage fertility but don't see it working. In South Korea, people are turning down $22K-$75K for a baby bonus, mostly men are turning it down. I believe things have shifted and will continue to deteriorate unless some of the factors that discourage men from participating in family formation. I do understand the concern for the women but a lot of young men I speak with are not afraid of the cost of children, however, they are afraid of the cost in working for 5-10 years and losing everything, alimony until the child is 18 and spousal support that also prevents them from starting another relationship. Until some of these risks are eliminated, out-of-wedlock pregnancies will increase. The government promotes non-marriage. I understand 50-60 years ago those protections were necessary for women but I believe those protections now need to be in place for men. All the data points to more single men than single women, so $2,000 is just taking from Peter and giving it to Mary. I have a daugther, and a son and will advocate for both.
I'd honestly love to read more ethnographies of men who fear marriage for these reasons and how they're approaching dating and discernment. Obviously if you don't know how to find and befriend a woman you trust deeply, it's hard to be happily married.
Throwing $2000 at new parents isn’t nearly enough—in fact it’s insulting. If a woman has a C section and the baby spends even a few days in NICU, you are talking more than $2000 out of pocket-you are talking hitting your out of pocket limit, and given how many employers are forcing people into high deductible plans, that can be more like $15,000 because being a combination of mom and baby, you have to hit your family out of pocket—not just the amount for mom.
Then there is the issue of income loss during parental leave. Daycare expense if the parents plan to return to work. And yeah, car seats, strollers, and all the other routine expenses.
If you want to remove the financial penalty that parents suffer, insist on parity between contraceptive coverage and prenatal/childbirth coverage. The ACA mandates that birth control be covered without any out of pocket—-e.g. free to the insured—if it’s free NOT to have a kid, it should be free to have a kid. Maybe the Feds could reimburse the insurance companies if it’s financially ruinous to them to provide this benefit. Or put all pregnant women on Medicaid and mandate that health care providers accept Medicaid for pregnant patients. Lots of ways to skin this cat.
I still think the most elegant solution to addressing the financial penalty that is parenting was proposed by former Senator Mitt Romney—take a look at his child tax credit proposal. It started in the second trimester of pregnancy, and I think it covered kids until age 6 or so—-about the time they are in school full time. It was enough to give almost all families a real choice as to whether to pay for decent child care or have one parent opt out of paid work. Having done both (worked full time with a baby under age 1 and stayed home full time after the second kid) I believe the key to unlocking this problem of people not being able to have the children they want is to enable families to choose to do their own childcare or hire childcare. If you are a high earner and love your job, the difference between day care and a nanny might be covered by a tax credit. If you are a low paid Amazon worker, the child tax credit provides income replacement giving you the choice as to whether to return to work or not.
We spend untold trillions on seniors and paltry sums on the future taxpayers of this country. Maybe rebalance the scales and give younger people a hand, and increase taxes on capital gains and on high earners Social Security benefits to pay for it.
I will now leave my soapbox!
> The ACA mandates that birth control be covered without any out of pocket—-e.g. free to the insured—if it’s free NOT to have a kid, it should be free to have a kid. Maybe the Feds could reimburse the insurance companies if it’s financially ruinous to them to provide this benefit. Or put all pregnant women on Medicaid and mandate that health care providers accept Medicaid for pregnant patients.
This kind of adjustment doesn't make birth free, though it does spread the burden more to non-parents through either increased premiums or increased taxes.
Because 42% of births are already free (the moms who are on Medicaid), I prefer a baby bonus to making the rest of them free. Making birth free would help *me* but exclude that vulnerable 42% from any additional benefit.
The people covered by Medicaid are already getting the benefit of no out of pocket expenses for prenatal care and childbirth. Why not make that a universal benefit? It makes more sense than an arbitrary stipend. If you have no complication and a midwife attends your home birth, your cost is going to be a lot different than if you end up in premature labor, have a C section, and your baby ends up in NICU for a week. If you hand each family $10,000 the one that had the home birth is ahead and the one with the preemie is still in a financial hole while having to care for a fragile baby.
The focus of my day job is on what near-term wins are possible for families. There's no appetite or budget room for $10k per baby this year.
If you were targetting the average out of pocket cost for delivery for parents who pay anything, you'd be at $3k, not so far off from the bonus number. The out of pocket is what matters, the bill numbers are made up.
https://www.healthsystemtracker.org/brief/health-costs-associated-with-pregnancy-childbirth-and-postpartum-care/
>Costs for pregnancies resulting in a vaginal delivery average $14,768 ($2,655 of which is paid out-of-pocket) and those resulting in cesarean section (C-section) average $26,280 ($3,214 of which is paid out-of-pocket).
To even hope to change behavior, you have to remove the financial disincentives for having kids. $2000 won’t change behavior-it will just throw money at people who would have had kids anyway, so you are really just wasting money.
Bill numbers may be made up, but people are still legally obligated to pay the bills that they incur. Everybody hates insurance companies, so there may be a possible solution here by arguing basic fairness—why should family A be stuck with a bill for $10,000 because of bad luck (having a C section and having a high deductible insurance plan) while family B only has to pay $2655 (having normal insurance and a vaginal birth). Really—take a look at insurance parity as one way to address helping new parents get back on their feet after childbirth.
I agree that the high prices can't shape patient behavior as they do for elective work. I'm pretty pro a cap on max childbirth costs, I'm just not convinced the cap should be $0.
Any extra $, even if one-time, can throw someone off Medicaid, which has a very low cutoff point for income and assets. It could be very tricky to set up a baby bonus that was neither taxable as income, nor throwing recipients off Medicaid. Medicaid eligibility is handled through a different office than the IRS, and even within agencies, keeping information current has many glitches.
It’s been done before by just including into the bill language that the money isn’t income for the purpose of Medicaid, SNAP etc.
Mitt Romney's proposal does look better. BTW, tho, I don't agree that help for parents and kids should come at the expense of care for Seniors. Medicare isn't free, and earning a bit more than a minimum can double medical expenses for people on Medicare. I'd favor Trump's idea of not taxing Social Security once income hits a relatively low amount. More Seniors live on the edge of poverty than you may realize, and those who have higher Social Security incomes have earned it.
Is the size a concession to political constraints--in which case I totally understand--or do you think there are good reasons not to go (much) bigger?
A mix of both! I've heard good faith concern about stacking too much ($5k bonus + CTC + EITC) for low income families in a way that would genuinely crowd out work.
The reconciliation bill has very little space for new provisions, so a lower number has a chance of inclusion without breaking the budget.
Some of people's questions about ideal size for a bonus are best answered by passing one and returning to the topic in ~5 years, when you've run difference in difference studies.
Hi Leah! Thanks so much for this take. I’m an American who lives in Norway (here because my husband is Norwegian) and I’ve had both of my kids here so I’m the beneficiary of all of the excellent family policies here. While I prickle at the framing of a $5K “baby bonus” as an incentive to have more babies (especially in a country that no longer guarantees reproductive freedom) I also believe that introducing this policy could be an important stepping stone to building up more structural support for parents in the United States. I completely agree with many who say that $5K isn’t nearly enough, but for a lot of lower and middle income families, it could make a huge difference, as you point out, and is maybe a good place to start.
I was wondering what you think about, as an alternative to a one-time payout, monthly payments instead? In Norway we have something called “barnetrygd” which is a monthly child benefit payment automatically paid to families each month. This policy was first introduced in 1946 as a small amount to compensate mothers for childcare at home and has gradually increased over time. The amount just went up again in May, and is now about $190 per child per month, regardless of the family’s income. (Interestingly, I have heard that the decision to give the same amount to all households was for the sake of efficiency; apparently it costs more to employ a bunch of people to sort out different amounts based on income rather than just give them same to everyone.)
This money gets directly deposited into the mother’s bank account each month, starting from the month a child is born and until they are 18, and is tax-free income. Over 18 years, this adds up to about $40,000.
I know this is more than the U.S. would probably be willing to provide (at least now) but I wonder what you think about this as an alternative model, and if you know of any similar policies that have been proposed in the U.S.?
I think a monthly payment is a non-starter in a Republican trifecta (where the Republican party controls both houses of Congress and the presidency). Monthly payments definitely raise anti-welfare hackles in the Republican Party, and tend to sound more disconnected from tax policy.
The child tax credit, paid out once yearly, isn't as far off from the barnetrygd as you might expect. The $2000 credit is worth $32k over the range of a child's life (it's paid out until the kid turns 17). But it's important to keeping it bipartisan that it isn't monthly.
Hi Leah! I'd be really interested in hearing you interact with my colleague Len Lopoo's op-ed in the Wall Street Journal this week. I don't expect you agree with him but would love your thoughts.
https://www.wsj.com/opinion/how-to-make-american-babies-again-pronatalist-policy-41e88053
Ok, so obviously I disagree about the ethics of IVF tout court, but for folks who are open to it...
I think he's making my case for me in this graf:
"Baby bonuses work the same way. A small financial incentive may convince a couple to have a child earlier than originally planned, even if the offer isn’t time limited as in the housing example. But that’s it. When naive analysts look at the data and observe a rise in childbearing after such a subsidy is introduced, they are often seeing this temporary speedup in family planning. The government ends up paying for children who were already going to be born absent the baby bonus policy. But the Trump administration doesn’t want a short-lived acceleration of already inbound births."
Having intended births happen a little earlier is great!
-it opens up a chance at a second or third kid who might have been harder to achieve if your first came later.
-it means you get MORE YEARS WITH YOUR CHILD. If both IVF and baby bonuses did not increase the fertility rate but just shifted kids forward and back, then baby bonuses would be clearly superior
Neither IVF subsidy nor baby bonus is likely to produce a huge boost to fertility. But helping people have kids earlier is more pro-family than focusing on the back end. (And having kids earlier is itself a way of decreasing the odds of derailment by infertility)
Thinking about how a $2,000 baby bonus would affect women in different circumstances, I couldn't help but slide into thinking about other countries that offer such magnificent support for parents. So I fantasized briefly about $2,000 covering a passport and airfare and visa to a better country....I wonder if women and couples are starting to consider this when pregnancy occurs -- or even when they're considering having a baby -- even if they don't have remote jobs that don't require their frequent presence in the United States. Parental leave? Child care? Free medical care and free college and graduate education even for non-citizens?
Great suggestions, Leah. However, I think we are past this stage at this point. What this will result in is further creating kids without fathers. We are at this stage because of how certain things are incentivized and $2,000 will just add to that incentives. What is hard for everyone to grasp today is you have to incentivize the majority of men to the whole baby industry. Without changing divorce policies, alimony laws and policies that men see as risk to getting into the baby making industry, most other measures will only further incentivize bad behavior.
I think people certainly fool around outside of marriage already, and it's the sex, not the possibility of a CTC or baby bonus that is the main draw. And I don't want women who get pregnant out of wedlock to fear immiseration—then the obvious solution is abortion.
I think the government should never impose marriage penalties, but it's limited in how it can promote marriage. Cutting a check isn't the same as having a relationship. I think churches could do a lot more—I like this program: https://www.christianpost.com/news/texas-church-offers-free-weddings-to-dozens-of-cohabiting-couples-the-gospel-is-redemptive.html
Thank you for your response. "And I don't want women who get pregnant out of wedlock to fear immiseration" but the data already shows that this is the case for a lot of men. I'm all for your suggestion here to encourage fertility but don't see it working. In South Korea, people are turning down $22K-$75K for a baby bonus, mostly men are turning it down. I believe things have shifted and will continue to deteriorate unless some of the factors that discourage men from participating in family formation. I do understand the concern for the women but a lot of young men I speak with are not afraid of the cost of children, however, they are afraid of the cost in working for 5-10 years and losing everything, alimony until the child is 18 and spousal support that also prevents them from starting another relationship. Until some of these risks are eliminated, out-of-wedlock pregnancies will increase. The government promotes non-marriage. I understand 50-60 years ago those protections were necessary for women but I believe those protections now need to be in place for men. All the data points to more single men than single women, so $2,000 is just taking from Peter and giving it to Mary. I have a daugther, and a son and will advocate for both.
I'd honestly love to read more ethnographies of men who fear marriage for these reasons and how they're approaching dating and discernment. Obviously if you don't know how to find and befriend a woman you trust deeply, it's hard to be happily married.
The divorce rate for *first* marriage is falling: https://www.bgsu.edu/ncfmr/resources/data/family-profiles/FP-25-02.html