Build Back Better’s Care Investments Offer a New Way to Think about the Role of Government

October 8, 2021

As reporters and pundits focus their attention on whether Congress will spend $2 or $3.5 trillion on President Biden’s economic agenda and how to sequence bills to secure the votes, the public—and perhaps policymakers themselves—risks losing sight of the key questions that should drive any forthcoming judgments: What do we most need, for our economy and for our society? And what must we do to achieve it?

One answer to those questions: care investments. Investments in the care economy help families address major life costs, and prevent further erosion in women’s labor force participation, as many commentators, experts, and activists have rightly argued. The proposed investments in the care economy also serve the goals of economic transformation, building a sector the US will increasingly need, with the federal government taking the lead where both private and public investment—in this case, a result of our legacies of slavery and patriarchy—have been insufficient. 

This idea—that there is an affirmative role for government in shaping and creating the industries or sectors we as a society need—is a relatively new (old) set of insights, and is instructive. My colleagues Felicia Wong and Mike Konczal have argued that a new progressive worldview has been emerging over the last several years, and includes thinkers like Mariana Mazzucato and Roosevelt Chief Economist Joseph Stiglitz, who argue that government can and should play a role in directing and catalyzing certain areas of the economy so that it produces better outcomes for people and the planet. These “economic transformers,” as Wong describes them, often rely on government-investment-led strategies to set direction, particularly in areas where collective action problems and short-termism have limited private investment. 

This strand of progressive thinking is evident throughout the Build Back Better agenda currently under debate, from climate investments to supply chain resiliency funds. The plan’s proposed investments in the care economy can also be viewed through this lens, since care investments reflect and anticipate an increase in care needs over the coming decades—requiring meaningful steps from the government to address these challenges.

An Aging Population Requires the Government to Build the Long-Term Care Sector

The US population is aging. The 65-and-older population grew by more than a third during the past decade. According to National Population Projections, the number of adults over age 65 is expected to grow from 49 million to 77 million in 2034 to 974 million by 2060. 

As the population ages, a higher proportion of individuals will likely need and use long-term services and supports (LTSS). Research from the Office of the Assistant Secretary for Planning and Evaluation estimates that about half of today’s seniors will develop a disability serious enough to require LTSS. 

There has also been a shift in the delivery of long-term care over the past several years, away from institutionalized care and toward what are known as home- and community-based services. One reason for this shift was a 1999 Supreme Court decision, Olmstead v. L.C., a landmark civil rights case which held that unjustified segregation in the form of institutionalization is discrimination under the Americans with Disabilities Act, requiring public entities to provide community-based services where appropriate and reasonably available. 

As a result of these demographic and sectoral shifts, the number of home and personal care aides is expected to grow by 33 percent over the next 10 years, much faster than the average for all other occupations. 

Inadequacies of the Current Market Require the Government to Build the Childcare Sector

The private market for childcare, too, has failed to meet our collective needs. 

A recent report from the Treasury Department describes the reasons for this failure: Revenues are constrained because parents are limited by their own earnings to an upper limit in what they can pay; the costs are highest during a period of life when families have the least amount to spend; it is a labor-intensive industry; and persistent racial and gender stereotypes have depressed pay, resulting in low wages and high turnover. These compounding challenges have created childcare deserts, or areas with an insufficient supply of licensed childcare. According to a 2018 report, prior to the pandemic—which only exacerbated the industry’s challenges—more than half of Americans lived in neighborhoods classified as childcare deserts. 

Care Investments in the Build Back Better Act Include a Meaningful Government Role in Planning for the Sector

The structure of the current proposals—particularly the long-term care proposals—also reflects a shift toward this new framework. Previous efforts to shape the long-term care landscape have focused on encouraging a private long-term care insurance market, creating a publicly administered long-term care insurance product, and allowing tax deductions for certain dependent care. 

The home care proposal under consideration, in contrast, is much closer to the kind of industrial policy and planning described by our colleague Todd Tucker. The proposal provides states with planning grants to “develop plans to expand access to home- and community-based services (HCBS) and strengthen the HCBS workforce,” and increases the amount of federal resources through Medicaid for states that implement their plans. The proposal satisfies many of the criteria Tucker identifies for progressive industrial policy: It fosters the industries we most need, promotes equity and environmental sustainability, enhances democratic governance, and builds the capacity of government to sustain it. 

Rather than leaving the allocation of resources up to the market, the proposal creates a democratic process to build a plan to strengthen this industrial sector—one that is critical to meet the needs of our economy and society.

The care investments included in the Build Back Better Act embrace a new progressive approach to transform the economic sectors we need for the future—yet another reason they are essential parts of the Build Back Better agenda.