Following extensive discussions over several months, Montana’s Economic Affairs Interim Committee has committed to drafting legislation aimed at addressing a key issue affecting childcare providers in the state: soaring liability insurance costs and coverage concerns.
The committee’s decision marks a significant step in the effort to support childcare providers grappling with rising operational expenses, which include insurance premiums that have either skyrocketed or led to dropped coverage.
This move represents the committee’s initial action on childcare and workforce challenges, reflecting one of its key interim objectives. The pressing need for reliable childcare has been underscored by parents, providers, and government officials, who have highlighted the critical role of childcare in sustaining a robust workforce. However, providers have encountered hurdles due to escalating insurance expenses, narrow profit margins, and difficulty in retaining staff due to wage constraints.
According to the Department of Labor and Industry, nearly 70,000 Montana parents were unable to work full-time last year due in part to insufficient childcare options.
In previous deliberations, the committee dismissed a proposal to develop a comprehensive legislative package for the upcoming session, which would have included expanding eligibility for childcare scholarships, implementing tax credits for parents and providers, and exploring trust accounts and public-private partnerships.
Instead, the committee has been exploring potential insurance solutions, such as captive insurance or reinsurance models, following presentations that resonated with providers and state auditors.
A recent survey conducted by Zero to Five Montana revealed that 85% of childcare providers expressed interest in joining an insurance pool to secure more affordable coverage or improved benefits. The survey, which garnered responses from 228 providers statewide, highlighted significant increases in annual liability insurance premiums, with about one-third experiencing cost hikes of at least $1,000.
Notably, childcare centers serving more than 16 children reported average annual premium increases of $1,859, while smaller centers and family-based providers faced average increases of $503 and $269, respectively.
Angie Armour, Executive Director of Raise Montana, emphasized the need for aligning insurance standards with state licensing requirements to facilitate smoother risk assessment and coverage.
During committee discussions, Deputy Insurance Commissioner Frank Cote outlined the challenges posed by insurers’ stringent standards and highlighted the need for innovative insurance solutions to support the childcare sector.
Moving forward, the committee has endorsed exploring a reinsurance model akin to the Montana Reinsurance Association, which has successfully reduced premium rates in the health insurance market.
This proposed approach aims to establish a framework for providers to unify standards and strategies, potentially offsetting costs for insurers and fostering greater comfort in providing coverage.
The committee’s decision to advance legislation on the reinsurance concept signals a pivotal development in addressing childcare providers’ insurance challenges. However, other proposals, including eligibility adjustments for childcare scholarships and child tax credits, faced opposition within the committee, reflecting ongoing debates over broader policy solutions.
As discussions progress, stakeholders continue to advocate for comprehensive measures to support Montana’s childcare ecosystem and bolster workforce participation among parents.
