The Cost of Having a Baby in the United States

How can we reduce healthcare costs significantly while improving patient care?  One of the best opportunities is through improving maternity care, and a new report — The Cost of Having a Baby in the United States — shows that employers and taxpayers could save billions of dollars if the quality of maternity care were improved.  The report shows that the high proportion of babies delivered by Cesarean section results in commercial insurance plans and state/federal Medicaid programs paying thousands of dollars more per birth than for babies delivered vaginally, and that the difference in costs is growing over time.

Four million babies are born in the U.S. every year, and one-third of them are now delivered by C-section, a 50% increase in the last decade.  Not only do unwarranted C-sections create greater health risks for women and babies, the report shows that they also dramatically increase costs for employers and for state/federal Medicaid budgets.  For the commercially insured, the average cost of a birth by C-section was $27,866 in 2010, compared to $18,329 for a vaginal delivery.  Medicaid programs paid nearly $4,000 more for C-sections than vaginal births.  If the rate of C-sections were reduced from 33% to 15% (as the World Health Organization recommends), national spending on maternity care would decline by more than $5 billion.

The report also shows that there is significant variation in costs for each type of delivery both within individual states and across states, which means there are additional opportunities for savings.

Other findings in The Cost of Having a Baby include:

  • Increases in cost of care – The cost of maternal care (not including newborn care) increased by over 40% between 2004 and 2010 for commercially insured women.
  • High costs for newborn care – Total commercial payments for care of newborns were $5,809 for babies delivered vaginally and $11,193 for cesarean births.  Total Medicaid payments for newborn care were $3,014 for vaginal births and $5,607 for cesarean births.  Reducing the rate of prematurity among infants could significantly reduce these costs.
  • High charges for the uninsured – Uninsured parents could be charged over $50,000 for a baby born by c-section and over $30,000 for a baby born by vaginal birth.  Average provider charges for a c-section in 2010 were $51,125, but commercial insurance plans only paid $27,866, 55% of what an uninsured patient could be asked to pay.
  • Regional variation in costs – The costs of childbirth differ dramatically depending on where the mother lives.  The average payment by commercial insurers for a vaginal birth (not including newborn care) was $10,318 in Louisiana and $11,692 in Illinois, but payments were nearly 50% higher in California ($15,259) and Massachusetts ($16,888).  The average payment for a c-section was $13,943 in Louisiana and $15,602 in Illinois, but $20,620 in Massachusetts and $21,307 in California. There is also significant variation in costs for births even within individual states.  For example, although the average maternal cost for vaginal birth in Massachusetts was $16,888, 25% of vaginal births cost more than $19,000 and 25% cost less than $13,000.  (Although the study was not designed to determine the causes of this variation, other studies have shown that variation is due to different prices charged by different hospitals and clinicians as well as different needs of women and babies.)
  • High costs of hospital-based delivery – The largest share of all combined maternal-newborn costs goes to pay for hospital or other facility costs regardless of the type of birth.  59% of total maternal and newborn care costs for vaginal births are used to pay facility fees, and 66% of costs for c-sections are for facility fees.  Similarly, the hospitalization phase of childbirth consumed from 70% to 86% of all maternal and newborn care costs, depending on payment source and type of birth.  (Consequently, increasing the use of birth centers for women who want to use them can greatly reduce procedure use and healthcare spending while improving quality.)

Download the Report