Insights into the black box of child care supply: Predictors of provider participation in the Massachusetts child care subsidy system

Abstract

The United States child care subsidy system relies on the voluntary participation of private providers in the market in order for low-income families to access otherwise unaffordable care. However, with few states able to pay child care providers subsidy payment rates at market value (National Women's Law Center, 2015) and increasing pressure for providers to improve their quality of care (Child Care and Development Fund [CCDF] Program, 2016), there is concern at the federal level regarding the supply of providers willing to participate in the subsidy system (CCDF Program, 2016; Schumacher, 2015). Using administrative data from Massachusetts, this study examines the factors associated with provider participation in the child care subsidy system. Findings from logistic regression analyses indicate that lower administrative capacity, higher private pay prices (in comparison to the subsidy payment rate), and higher local market household income may limit or reduce opportunities for participation in the subsidy system. Results also suggest that for-profit providers are not avoiding participating in the subsidy system, but may find participation challenging if subsidy payment rates are too low (compared to private pay prices). Additionally, although the total pool of accredited providers is small, accredited providers have greater odds of participation compared to non-accredited providers, indicating that families may have some access to quality care. These findings suggest that states should focus on identifying 1) ways to ease administrative impediments to entry into the subsidy system, 2) effective provider recruitment tactics, and 3) monetary/non-monetary incentive structures that can build a large and diverse supply of high quality subsidized care.