WASHINGTON, July 11 (Reuters) - U.S. Vice President Kamala Harris on Tuesday announced new steps to lower the cost of childcare for American families with a proposal that would cap co-payments under a block grant program that serves 1.5 million children and their families each month.

"This is a critical issue for almost every family in our country," Harris told reporters. "Low-income families often spend one-third, one-third of their yearly income on childcare, more than they spend on their rent or mortgage."

"No family should have to choose between high quality care for their child or to give up their career or put food on the table," she added.

The proposed rule would limit working parents' co-payments under the Child Care & Development Block Grant (CCDBG) program to no more than 7% of a family’s income.

The program subsidizes child care for families with income below 85% of their state's median income level, but requires most to pay a small co-payment.

The proposal, which will have a 45-day comment period, will encourage states to waive co-payments for families at or below 150% of the federal poverty level, the White House said in a fact sheet on the changes. A senior administration official said the Department of Health and Human Services (HHS) hoped to publish the final rule in spring 2024.

Lowering childcare costs has been a big priority for the Biden administration, but a deeply divided Congress has thwarted adoption of some key proposals, including a push to make permanent an expanded child tax credit that was implemented during the COVID-19 pandemic, and other measures aimed at aiding licensed and regulated childcare providers.

The proposal would also ensure that childcare providers participating in the program are paid on time, based on program enrollment instead of attendance, the White House said.

It will also try to make it easier for families to access the block grant program, by encouraging states to accept online applications and making siblings of children who already receive the subsidy presumptively eligible for benefits.

HHS estimates the average co-payment for child care for families benefiting from the block grants rose nearly 20% between 2005 and 2021, prompting many families to reduce their work hours or exit the workforce entirely.

Costs are also disproportionately high for families with low incomes, the White House said, citing a U.S. Census Bureau survey which found that families with low incomes paid five times more than families with higher incomes, as a portion of their income.

If enacted, the proposed changes would reduce co-payments for some 80,000 families, the White House said.

A senior administration official said the rule would use existing resources to maximize benefits for families and child care providers.
Reporting by Andrea Shalal; Editing by Sharon Singleton and Emelia Sithole-Matarise