Expensive Children in Poor Families: Out-of-Pocket Expenditures for the Care of Disabled and Chronically Ill Children in Welfare Families

A significant minority of poor families care for children with disabilities and chronic illnesses. This study is among the first to explore private costs resulting from children's disabilities among low-income families. We find that almost half of the sample of California AFDC families with special-needs children incurred some direct, out-of pocket expenses in the preceding month, and about 20% incurred total costs exceeding $100. We also estimate lost employment income among low-income mothers caring for children with disabilities. We conclude that both out-of pocket expenses and foregone earnings represent a substantial burden for many low-income families with special-needs children, and we discuss the policy implications of these findings. Key Words: child care, disability, handicap, poverty, welfare. Chronic mental or physical impairments in childhood can impose substantial private costs on families. The costs of special medical care, therapeutic and educational services, transportation, and other special-needs services can constitute a particularly heavy burden for poor families. In addition, the time required for the child's care and the limited availability and/or high cost of specialized child care may reduce parents' ability to sustain paid employment. The extent of these direct and indirect costs, their impact on families' economic well-being, and the role of public programs in offsetting them, are at the heart of current debates about reforms to joint federal-state welfare programs, including Medicaid, the Supplemental Security Income (SSI) program, and public assistance (formerly Aid to Families with Dependent Children or AFDC, now Temporary Assistance for Needy Families or TANF). Although information about the private costs of children's disabilities is relevant to current policy debates, we know relatively little about the economic impact of a special-needs child on a low-income family. This paper investigates the private costs of disability. Specifically, we look at economic costs experienced by current and recent welfare recipients in California who care for children with special needs. We examine the extent to which these families experience out-of-pocket costs and the factors that predict higher costs. We also examine indirect costs, in the form of maternal employment reductions. Finally, we consider the impact of costs on the extent and the depth of family poverty. BACKGROUND AND PRIOR RESEARCH Childhood Disabilities and Poverty Although estimates vary considerably, most research suggests that about 5 to 7% of children experience a condition that results in some impairment or limitation of their ability to engage in the usual activities of a child their age (Anon, Loprest, & Steuerle, 1996). Although disabilities are not confined to any race, class, or income level, children in low-income families are more likely to suffer chronic illnesses and disabilities than their more affluent counterparts (McNeil, 1993; Newacheck & McManus, 1988). Newacheck and McManus estimate that children in low-income families face a 40% higher risk of being disabled. The higher prevalence of disabilities among children who are poor is due in part to income-- related risk factors such as environmental compromises and inadequate health care. A child's disability or health problems might also increase the risk that a family will be poor. The economic impact of caring for children with disabilities and illnesses is typically calculated using a human capital approach. This model assumes that the care of exceptional children imposes on families both direct costs, in the form of medical and other rehabilitative or restorative services (including hospitalization, outpatient care, home health care, medications, and rehabilitative services and devices), and indirect costs resulting from the loss of productive output by the caregiver (e.g., the loss of earnings due to increases in the extent and intensity of caregiving responsibilities) (Hodgson & Meiners, 1982; Jacobs & McDermott, 1989). …