The Future of Children, Princeton - Brookings: Providing research and analysis to promote effective policies and programs for children.

Medical care during pregnancy, childbirth, and infancy (the first year of life) not only has a significant impact on the health and survival of young children, but also is a major source of health care expenditures. However, despite several surveys that examine pregnancy and childbirth specifically¹⁷ and others that detail health care expenditures generally, an overall expenditures data set from which a comprehensive estimate of the costs of pregnancy and infant care can be calculated is not available. Accordingly, we follow the lead of several previous investigators¹⁸ in drawing on data from a variety of sources—some large national surveys, some smaller specialized studies—to obtain estimates of both the volume of services provided to pregnant women and infants in 1987 and the prices of these various services. All prices and quantities presented are for 1987 unless otherwise stated. The estimates are detailed in Tables 2 and 3. The sources, methods, and assumptions underlying these estimates are presented either in the text or in notes to the tables to enable the reader to assess the quality of the estimates and place them within the context of the other analyses presented in this article.

Estimated health care expenditures for children in their first year of life totaled $12.6 billion, or $3,271 per infant in 1987 (Table 2). Approximately 18% of the total was spent on care in the hospital for normal newborns. Another 72% was spent for the initial hospitalization and inpatient physician care of newborns suffering some complication of birth and for the care of infants requiring rehospitalization during their first year of life. Only 10% of the total, or $312 per child, was spent on health care not requiring hospitalization, including well-child and preventive care.

Approximately 80% to 85% of newborns are discharged from the hospital with their mothers after a routine nursery stay and normal well-infant care.¹⁹ Because information on the cost of care for these "normal" infants was not tabulated separately in the 1987 NMES data used elsewhere in this report, we use estimates of the mean cost of care for these infants developed by the Health Insurance Association of America.^20,21 In 1987, the mean hospital charge for these infants was $609, and well-infant pediatric care cost $134 on average.

Information on expenditures for infants born with some complication which resulted in their being discharged at a time other than that at which their mothers were discharged is available in the 1987 NMES. Information on expenditures for all infants after their initial hospitalization is also available in the 1987 NMES, although for this analysis it is not possible to distinguish between expenditures on the initial hospitalizations for infants with complications and expenditures on rehospitalizations. Details of these costs are presented in Table 2 as are estimates of total costs which are the sum of total expenditure estimates from NMES and the extraneous estimates of expenditures on normal newborns.

When estimated expenditures on normal infant care—$2.2 billion from table 2—are added to the estimate of total MPHCE for all children and for those 0 to 2 years old (Table 1), total MPHCE for children is increased to $52.0 billion and MPHCE for those 0 to 2 years old is increased to $19.0 billion. Despite the fact that infants accounted for less than 6% of the population of children, expenditures on health care for infants accounted for almost 25% of aggregate health care expenditures on all children 0 to 18 years old in 1987. On a per capita basis, health care expenditures on infants (less than 1 year old) were greater than those of any other age group except those 65 years of age and older.

Using data from several sources (Table 3), we estimate that total charges for obstetrical care in 1987 were $15.2 billion or $3,983 per live birth. Obstetrical care includes prenatal, delivery, and postnatal care for pregnant women including those whose pregnancies terminate spontaneously in a miscarriage or stillbirth but not contraception, abortion, or infertility services. Hospital charges for delivery account for 54% of expenditures on obstetrical care; professional fees (including those of midwives), about 35% of costs, and the balance is largely expenditures for separately billed tests and diagnostic services.

Almost 99% of births in 1987 occurred in hospitals with a small number occurring in free-standing birthing centers. Mean hospital charges were $1,766 for a normal delivery. Total charges including practitioners' fees at free-standing birthing centers for a normal delivery with a 1-day stay were about 33% less than hospital charges for the same service, but only 19,047 births occurred in such centers in 1987. Hospital charges averaged $3,460 for a cesarean delivery. The number of cesarean deliveries has increased steadily in the United States since 1980, and they accounted for more than 25% of deliveries in 1987.²⁰ A cesarean delivery adds about two thirds to the cost of obstetrical care because of longer hospital stays for both mother and baby, increased physicians' fees, and higher hospital charges for labor and delivery rooms, anesthesia, and various ancillary services, including laboratory and supplies.²¹

Both the hospital and the physician's charges used in the estimates are based on data collected by the HIAA.²² The mean charge for a complete package of obstetrical care including prenatal visits, the physician's services at a normal delivery, and one postpartum visit was $1,313. A complete package of care from a midwife costs $874 on average for a normal delivery, and physicians' fees for complete care including a cesarean delivery are about one-third higher than the charge for complete care with a normal delivery.

A variety of relatively new but nonetheless frequently performed diagnostic procedures add to the cost of pregnancy. These tests include amniocentesis to detect chromosomal abnormalities, electronic monitoring of the fetal heart rate during labor, ultrasound imaging to monitor the developing fetus, and fetal oxytocin stress testing to evaluate fetal response to uterine contractions. As reported in Table 3, information on the costs and frequency of performance of a number of these expensive diagnostic procedures is available from several sources. We have not, however, been able to obtain an estimate of the frequency of performance of oxytocin stress tests which we estimate to have cost $71 each in 1987.²⁰ Accordingly, we have not included the cost of that test in our estimates.

Expenditures on Miscarriages and Stillbirths

Data from the National Survey of Family Growth¹⁷ indicate that approximately 17.3% of pregnancies terminate spontaneously in stillbirths and miscarriages which can sometimes be as costly as live births. Applying this proportion to the 3,809,394 live births for 1987 suggests that there were 802,000 miscarriages and stillbirths in that year. Following Fuchs and Perreault,¹⁸ we assume that stillbirths occurring after 28 weeks of pregnancy are as costly on average as live births, that stillbirths occurring between 20 and 28 weeks cost 75% as much as live births, and that miscarriages prior to 20 weeks result in a physician charge equal to one-third the fee for a normal delivery. Our estimate of the relative proportion of miscarriages and stillbirths which occurred at different stages of pregnancy are reflected in the average cost estimate reported in Table 3. Accordingly, the total cost of spontaneous pregnancy termination in 1987 is estimated to have been $527 million.²³

Our estimate of total obstetrical care expenditures—15.2 billion in 1987—is approximately 85% higher than the estimate of $8.2 billion reported by Fuchs and Perreault for 1982.^18,24 The increase in the number of live births (128,000) can account for only 4% of the increase in total costs over the 5-year period. In addition, the increase in the frequency of cesarean deliveries to 25% of live births in 1987 from almost 18% in 1982 appears to have increased total obstetrical costs by more than one-half billion dollars or 3.4% in 1987.

It appears, therefore, that the differences in average cost figures we used for 1987 as compared to the Fuchs and Perreault estimates for 1982 account for most of the difference in the estimates of total obstetrical costs. One reason for a difference in the average cost figures may be a change in the procedure the Health Insurance Association of America (HIAA) followed in estimating mean hospital costs from responses to its survey of the cost of hospital care for maternity and newborns.²⁵ We estimate, however, that this change in reporting only increased reported hospital costs by 2% for normal deliveries and 3% for cesarean deliveries over what would have been reported under the previous methodology.

Another reason for the substantial increase in the cost of obstetric services between 1982 and 1987 is the increase in physician fees. Physician fees in general increased rapidly between 1982 and 1987—by over 40% as measured by the physician component of the Consumer Price Index.²⁶ Increases in the cost of medical malpractice insurance appear to have been a factor in the general increase in physician fees between 1982 and 1987 and an important factor in the escalation in obstetrical fees. In 1987, mean malpractice insurance premiums for obstetricians were over $37,000, an increase of 238% over the 5-year period.²⁰

The substantial increase in malpractice insurance costs does not appear, by itself, to account for the near doubling of physician fees for obstetrical services. Even under the extreme assumptions that the premium cost increase was incurred by all practicing obstetrician-gynecologists and that these specialists accounted for all obstetrical care, the increased cost of malpractice insurance of slightly under $170 per pregnancy would account for less than a quarter of the increase in physician fees over the 5-year period.²⁷