Baby bonds fail – determining eligibility is impossible

1. Who is eligible for a baby trust, and how do you identify those people?

Because baby bonds are meant to address wealth inequality, it could be logical to base eligibility on a measure of wealth, with larger deposits for people from households with little wealth. Unfortunately, publicly available data on household wealth are limited at the local and state levels, making it difficult to identify eligible people. Urban and others are working to improve , which could help states better target their programs.

Current legislative proposals use household income or eligibility for public benefits as a proxy for wealth and program eligibility. For instance,  applies to children from households earning less than 200 percent of the federal poverty level. In  (PDF) and  (PDF) enrollment is automatic for births covered by state Medicaid.

Relying on Medicaid eligibility to determine baby bonds eligibility, though smart and implementable as a policy, may have drawbacks. In California, Medicaid-based eligibility would include , which would make a Medicaid-based baby bond program costly and thus politically difficult to achieve. Furthermore, linking eligibility to other public benefits programs could unduly exclude  (PDF), who are less likely to participate in public benefits programs for many reasons.

States are also contending with how to identify and enroll people into baby trust accounts. Birth certificates and Social Security numbers identify new births but aren’t easily linked to family income or wealth. If income proxies are used for enrollment, like Medicaid enrollment, states still need ways to notify families of their child’s baby trust account and contact families early and often over the years to leverage and link other services and supports that maximize health and economic well-being. At Urban’s convening, several states reported they are exploring solutions to share datasets to help identify and contact eligible families.