Politics

Here’s how much Massachusetts families could benefit from Biden’s ‘Build Back Better’ plan

A new study tries to peg the value of the bill's child tax credit, childcare cost caps, and other provisions across a range of different family types for each state.

Rep. Katherine Clark, with Rep. Richard Neal in the background, during a press conference last month. J. Scott Applewhite / AP

The combined benefits of several social policies in President Joe Biden’s “Build Back Better” plan could be relatively outsized for the average Massachusetts family, primarily due to the current prohibitive costs of childcare in the state.

According to an analysis released this week by the centrist think tank Third Way, married parents earning the state’s median income of $139,726 could save $12,550 a year through the bill’s child tax credit and cap on child care costs, along with provisions to fill gaps in health care coverage.

Meanwhile, a single parent earning the state’s median income could receive a benefit valued at nearly twice that much, according to the study.

Married parents with two children in Massachusetts
Median Income ($139,726): $12,550
50% Median Income ($69,863): $22,150
150% Median Income ($209,589): $4,950

Single parent two children in Massachusetts
Median Income ($32,621): $23,500
50% Median Income ($16,311): $24,150
150% Median Income ($48,932): $23,150

The potential savings is thousands of dollars more than the national average. According to Third Way’s study, the average family of four would get a tax cut and have lower costs of $7,400 from the provision, while the average American single mother of two would stand to receive a benefit worth $15,000.

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Both in Massachusetts and across the country, most of the value comes from the potential savings from the bill’s subsidies designed to cap annual child care costs for families earning up to 250 percent of their state median income at 7 percent of their income.

However, especially for families on the lower end of the income spectrum, that doesn’t mean a direct cut to their current costs.

Third Way used data from Child Care Aware of America, which puts the average price of center-based child care for a 2-year-old in Massachusetts at $19,600 a year.

(For the purposes of the study, the estimates were based on families with children aged 2 and 7, meaning only one would be in child care at a time.)

Of course, as the study acknowledged, many families, especially low earners, do not currently pay that much and instead pay for less expensive “family-based child care or rely on personal and informal networks for child care assistance.”

However, the study wrote that once other childcare provisions are phased in, such as investments to the direct care workforce, the benefit of the child care cap may more accurately reflect their center-based estimates.

More immediate and tangible savings would come in the form of the bill’s yearlong extension of the recently bolstered child tax credit, which Third Way estimates would save average Massachusetts families $2,600 a year. Lower-income single parents could get over $4,500.

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According to the study, families could save a few hundred additional dollars from the bill’s provisions to patch holes in health care coverage offered through the Affordable Care Act and Medicaid.

While the expanded child tax credit is slated to expire after next year, some Democrats are looking to make it permanent. For the sake of the study, Third Way calculated the combined benefits as if the provisions were in place at the same time.

Child Tax Credit benefits:

Married parents with two children in Massachusetts
Median Income ($139,726): $2,600
50% Median Income ($69,863): $2,600
150% Median Income ($209,589): $0

Single parent two children in Massachusetts
Median Income ($32,621): $3,800
50% Median Income ($16,311): $4,550
150% Median Income ($48,932): $3,350

Child Care Cost cap benefit

Married parents with two children in Massachusetts
Median Income ($139,726): $9,850
50% Median Income ($69,863): $19,300
150% Median Income ($209,589): $4,950

Single parent two children in Massachusetts
Median Income ($32,621): $19,600
50% Median Income ($16,311): $19,600
150% Median Income ($48,932): $19,600

ACA/Medicaid gap benefit

Married parents with two children in Massachusetts
Median Income ($139,726): $100
50% Median Income ($69,863): $250
150% Median Income ($209,589): $0

Single parent two children in Massachusetts
Median Income ($32,621): $100
50% Median Income ($16,311): $0
150% Median Income ($48,932): $200

The House of Representatives passed the Build Back Better plan last month, and Rep. Katherine Clark, a Massachusetts Democrat and assistant House speaker, expressed hope earlier this week that the Senate would follow suit this month.

However, resistance from centrist Democrats could push the legislation into the new year.

Clark’s office noted the social policy provisions would disproportionately benefit lower- and middle-income families in the wake of the COVID-19 pandemic.

“These are the long-term solutions we need to not just rebuild from the pandemic, but to create a more resilient and competitive economy in which everyone can participate,” the congresswoman said in a statement Friday.

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