Elections New York State Health

New York ‘Birth Grant’ Bill Would Pay New Parents With Medicaid Funds

A proposal from state Senator Andrew Gounardes would send some new parents $1,800 in the third trimester of pregnancy.

Julia Rock · November 4, 2024

A new proposal from state senator Andrew Gounardes would send some new parents $1,800 in the third trimester of pregnancy. | Flickr via Nicolas Raymond and Jim Legans, Jr. + Brad Racino

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A state lawmaker wants New York to give $1,800 to new parents — and has a plan to get the federal government to pick up half the tab.

His proposal comes as bipartisan interest is growing among state lawmakers in a time-tested strategy to tackle the state’s persistently high levels of child poverty and help families afford to remain in-state: send new parents cash.

“It’s the thing to do this year,” said Pete Nabozny, policy director at the Rochester-based advocacy organization The Children’s Agenda.

The latest idea comes from Democratic state Senator Andrew Gounardes, who recently proposed a “Healthy Birth Grant” — legislation to send $1,800 to parents during the third trimester of pregnancy. The federal government would help pay, as the program would be run through Medicaid, the health insurance program for low-income people and people with disabilities.

The money would only go to new parents who are on Medicaid, which covers about half of New Yorkers.

“When you have a new baby, the expenses come fast and furious,” Gounardes told New York Focus. “We want to make sure families have that extra financial support by the time the child is born, so they don’t have to worry about making ends meet.”

The bill makes use of a Medicaid waiver program, called Section 1115, that lets states test new ways to use Medicaid funds if approved by the federal government. The Biden administration has encouraged states to propose Medicaid uses to fund “health-related social needs.” Arizona and Oregon received waivers to finance rental assistance, and Delaware and Tennessee to cover the cost of diapers for infants. New York currently has a Section 1115 waiver that allows the state to use Medicaid for services like rental assistance and nutrition.

Senator Proposes $1,000 “Baby Bonus” to Help People Afford to Have Children

Julia Rock

Gounardes’s bill would require New York state to seek a new waiver, which the federal Centers for Medicare & Medicaid Services would need to approve — a decision that may depend on the results of this week’s presidential election.

His bill comes on the heels of another proposal to send payments to new parents.

Republican state Senator Jake Ashby introduced legislation this summer to send $1,000 to the parents of all newborns in the state. Since New York Focus first covered the bill, it has picked up eight Republican and one Democratic Senate cosponsors. It would cost more than Gounardes’s bill because it would be entirely funded by state dollars.

“I think it’s great that it continues to be a bipartisan focus,” Ashby said about proposals to send cash to families. “It’s something we need to focus on in terms of growing families in New York state.”

The United States is exceptional among rich countries for not providing cash assistance to new parents.

Parents in New York do get some financial help from the state and federal governments. They can get paid leave from work after their child is born, which replaces some of their wages. And they may be eligible for tax credits, depending on their income.

Yet New York’s child poverty rate remains one of the worst in the country. One in five kids in the state lives in poverty. In Buffalo, Rochester, and Syracuse, more than 40 percent of kids live in poverty.

Research has shown that providing cash to new parents is an effective way of combating poverty and improving health outcomes for kids over the course of their lives.

For example, research from Columbia and Stanford universities found that sending $1,800 birth grants to all new parents could almost entirely eliminate poverty for the first month after a child is born. (If the birth grant were targeted to Medicaid recipients, like Gounardes’s bill, the poverty reduction impact wouldn’t be quite as sweeping.)

“It provides a huge benefit to mothers and newborns at a pivotal point in their life,” said Sophie Collyer, one of the Columbia researchers who conducted the analysis. “And providing child allowances yields huge long-term benefits to society in terms of kids’ long-term health, educational outcomes, and earnings in adulthood.”

In 2021, President Joe Biden’s pandemic relief package temporarily expanded the federal child tax credit and sent up to $3,600 per child to parents. That measure cut child poverty in New York by 43 percent, according to Columbia University’s Center on Poverty and Social Policy.

After the federal measure expired, New York state expanded eligibility and offered a one-time bump to its own child tax credit.

But some lawmakers want New York to go further.

A picture of President Joe Biden with a thumbs up.

Last year, the state Assembly and Senate proposed expanding existing tax credits for families with children and sending cash to low-income mothers.

Hochul didn’t include either plan in her 2024 budget proposal. But she touted a measure that made it into the final budget to send a supplemental payment of up to $330 to recipients of the state’s child tax credit.

In 2021, Hochul signed a law requiring the state to cut child poverty in half over the ensuing decade. Measures like raising the minimum wage have moved New York a few percentage points towards that goal, but the state still has a long way to go. A Child Poverty Reduction Advisory Council set up under the law is supposed to issue recommendations later this month on how the state can hit its target.

Beyond that specific mandate, “there’s been momentum building over the past decade or so, where people have been talking about the need for programs that support families that don’t have as many conditions attached to them,” said Nabozny of The Children’s Agenda, who is also on the council set up by the 2021 law.

“There is a lot of real interest right now in finding a different way to support families, with a particular interest in families with very young children,” Nabozny said.

It’s not just at the state level, either: Vice President Kamala Harris proposed a $6,000 tax credit for parents of newborns as part of her presidential campaign platform.

But there are competing ideas as to how to go about supporting new parents.

The Medicaid waiver program lets states try out different uses for Medicaid funds in the hopes that their ideas will improve health outcomes and save the program money.

These waivers “have been a very important tool for the state and federal governments to advance new policies and evolve the Medicaid program,” said Courtney Burke, a senior fellow for health policy at the Rockefeller Institute of Government. “The federal government likes it because they get to use the states as a laboratory to learn what works.”

The use of the waiver program has depended on which party holds the White House. Former President Donald Trump’s administration encouraged states to use the waivers to attach work requirements to Medicaid, while the Biden administration has urged states to use them to address socioeconomic conditions that shape health outcomes.

“Poverty hurts our health,” Gounardes said. “The federal government has already approved over 20 waivers for programs that tackle social determinants of health, and we think this clearly fits the bill.”

Funding the “birth grant” through Medicaid has a clear benefit for New York state: Medicaid is half-funded by the federal government, so the state could make cash payments with a lower price tag. Gounardes estimates that his proposal would cost the state less than $100 million a year. But the idea might face resistance.

Senator Ashby, who proposed his own baby bonus, doesn’t support Gounardes’s idea. “His heart is in the right place, and I think that a financial incentive is a great thing,” Ashby told New York Focus about Gounardes’s new proposal. “But I don’t think that going through Medicaid is the best way to get this done.”

He said that health care providers in the state are struggling in part due to low reimbursement rates from Medicaid — a notorious complaint about the program — and that New York should focus Medicaid funds on helping existing providers.

Beyond the financing mechanism, experts see benefits in the design of Gounardes’s proposal.

One challenge of giving money to new parents through tax credits is that they won’t receive the funds until they file for their taxes; depending on what month their baby is born, that could mean waiting a year or more to get the benefit. Parents trying to cover the costs of a newborn might not be able to wait that long. Sending them a check directly would cut out these delays.

Funneling the cash through Medicaid means the program wouldn’t create additional administrative work to determine whether people are eligible, avoiding a major headache for applicants and over-burdened social service agencies.

Asked about the new proposals to send cash to new parents, the governor’s office declined to say if Hochul supported them — but pointed to Hochul’s past commitment to spend $7.5 billion on child care and the supplemental payments to the child tax credit negotiated during last year’s budget.

“I haven’t heard a ‘no’ from the governor’s office,” Ashby said.