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Insurance Matters:

October 1, 2003

Author(s): Allison Sesso
Edited by: Susan C. Anots, Esq.

An Emerging Crisis in Childre Care

Children are our future.  The quality of the care they receive in their early years can dramatically affect who they become.  Early experiences affect the development of the brain and lay the foundation for intelligence, emotional health and moral development.  Low income pre-school children enrolled in enriched pre-school programs show higher educational achievement, higher earnings and lower use of cash welfare assistance.

Numerous studies show both the immediate and long term positive effects on children who receive quality child care, which is commonly defined as a safe, healthy and stimulating environment where early childhood  education and trusting relationships combine to support each child’s physical, emotional, social and intellectual development. Given the importance of early education, it is critical that child care providers be treated as the early education professionals they are, that they be encouraged to remain in the field and that they be afforded opportunities to improve and advance their skills and education. Despite the importance of their jobs, child care providers are among the worst paid professionals. The average starting salary for a child care provider in New York State is $14,530, which is below the poverty level for a family of three.  The average annual wage for a child care provider in New York State is $19,610, comparable to waiters or waitresses and roughly half that of the average kindergarten teacher in the state.  In  addition to inadequate compensation, child care providers report problems accessing health and liability insurance. Not surprisingly, turnover rates can exceed 30%.

Child care is an important small business in New York State, constituting 22,000 licensed and regulated small businesses, including not-for- profit and for-profit centers, Head Start, prekindergarten, 11,000 family child care providers and 3,665 group family providers. In all 119,000 workers are employed in the licensed and regulated child care sector in New York State and care for more than 622,000 children.

These workers frequently take their concerns to the professional organizations that support them, such as the New York State Child Care Coordinating Council and the Family Child Care Association of New York State. These organizations are hearing increasing concerns about the inability of child care providers to access affordable health and liability insurance. In a survey of its members, the Family Child
Care Association of New York State learned that 24% of the 332 family and group family child care providers responding had no health insurance and 38% had no liability insurance.

Additionally, these organizations are hearing increasing concerns from family and group family providers (who operate programs from their home), regarding their inability to find and keep their homeowner’s insurance, even when they have a separate liability insurance policy that covers their businesses.  In the Family Child Care Association survey mentioned above, 3 providers reported having their homeowner’s insurance canceled.  Child care centers have also experienced difficulty obtaining liability insurance for their businesses, or finding coverage that is affordable.

The professional child care organizations also received numerous complaints from child care providers about their inability to obtain health insurance. Child Care Resource and Referral (CCR&R) agencies, which are community based organizations located in nearly every county of the state, assist parents with finding quality, affordable child care, and support child care providers in professional development and program operations. These CCR & R’s have independently recognized access to health and liability insurance as a major problem among their respective local provider communities, and asked their statewide membership organization, the New York State Child Care Coordinating Council to take this issue on as a legislative priority. CCR & R’s report that many centers cannot afford to provide benefits to their employees and many providers that work from home have no way of accessing health benefits.

In an effort to obtain more information on the extent and real dynamics of these issues we surveyed child care centers, regulated family child care providers and group family child care providers in several representative counties of New York State to examine the reported problems regarding their access to health and liability insurance in New York State. Family child care providers are providers who work out of their homes, caring for not more than 6 children, except for certain well defined exceptions. Group family child care providers also work out of their homes, but are permitted to care for up to twelve children, except for certain well-defined exceptions, so long as another adult is present.  The survey did not include unregulated home-based, child care providers, who by law, cannot care for more than two children.

A summary of the questions asked in the survey is contained in Appendix A – Methodology, which includes copies of the actual survey instruments.

The survey revealed that child care providers have problems obtaining and retaining both liability and health insurance. Family and group family providers report that they have difficulties getting and keeping homeowner’s insurance because they are child care providers.

Child care centers and home-based providers also have difficulty finding liability insurance for their child care businesses. Health insurance is also an issue, with few providers appearing to have insurance through their jobs.

With respect to liability insurance, this paper will describe the results of the survey and make recommendations to address the problem.  With respect to health insurance, this paper will discuss the options that already exist and suggest ways that these options might be expanded.
Given the reliance of New York’s parents on child care and the high turnover rates of child care providers, New York cannot afford to ignore two additional disincentives to become and remain a provider of child care. This report calls on the State of New York to assist the proprietors of these small businesses, by alleviating the crises that they are facing in accessing insurance.  

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