This month’s Health Affairs has a great article written by Dr. Michelle Moniz and colleagues that looks at the out of pocket expenses for the year before a live birth to the three months post-partum for commercially insured individuals who had a live birth at a hospital from 2008-2015. The headline finding is scary.
Among women with out-of-pocket spending, mean total out-of-pocket spending for maternity care for all modes of delivery increased from $3,069 in 2008 to $4,569 in 2015
Having a baby is expensive if you have insurance through work. About half of all births in the United States are by women covered by employer insurance. Almost all of the rest are covered by Medicaid which has a completely different and far lower to non-existent cost-sharing profile.
However, there is something further in the article that piqued my interest from an insurance and value point of view.
mean total out-of-pocket spending for vaginal birth increased from $2,910 to $4,314, and for cesarean birth it increased from $3,364 to $5,161 (appendix exhibit A2). These trends were largely driven by a rise in deductible payments in the study period. Among women with deductible payments, the mean deductible for vaginal birth increased by 62.3 percent, from $1,617 in 2008 to $2,625 in 2015, and the mean deductible for cesarean birth increased by 72.3 percent, from $1,532 to $2,640.
Standardized costs for vaginal and cesarean births showed some variation but did not vary greatly over time (vaginal birth: $24,317 in 2008 [95% CI: $24,184, $24,451] versus $23,148 in 2015 [95% CI: $23,012, $23,283]; cesarean birth: $39,702 in 2008 [95% CI: $39,390, $40,015] versus $43,774 in 2015 [95% CI: $43,402, $44,145]).
We know that the US voluntary C-Section rate is high. The high rate does not deliver better outcomes. It is expensive in both direct reimbursed costs and recovery time for the mother and family. We have seen in California efforts to drive down low risk C-section rates. However, the implied insurance designs are not helping with this goal. Two things are happening here as I lay out in the chart I created from the data in the above paragraphs:
| Costs in 2015 | Vaginal Delivery | C-Section |
| Deductible | $2,625 | $2,640 |
| Total Cost Sharing | $4,314 | $5,161 |
| Non-Deductible Cost Share | $1,689 | $2,521 |
| Total Cost | $23,148 | $43,774 |
| Non Deductible Costs | $20,523 | $41,134 |
| Total Cost Share Percentage | 19% | 12% |
| Implied Coinsurance Rate | 8% | 6% |
| Balloon-juice.com | 1/8/2020 | |
| Data from: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.00296 | ||
First the cost of labor and delivery through either pathway is too damn high. The deductibles that are being paid in 2015 are roughly similar to each other for either pathway. In both cases, the deductibles are a tiny fraction of total costs. In either case, as soon as a woman walks into her ObGyn’s office with a positive pregnancy test, there is no difference in the incentives being generated by the deductible. A $2,600 deductible will influence decisions to go to urgent care or an ER, it will influence decisions to stick with a brand drug or a similar generic, it will influence low level decisions, but as soon as the cost bundle is big enough to actually drive a significant portion of national health care expenditures, the deductibles are irrelevant.
Secondly, the implied coinsurance rate (Non-deductible Cost Share/Non-Deductible Costs) is higher for the cheaper alternative. That is messed up. The total cost of non-deductible cost sharing is $800 less for vaginal delivery than a C-section but the implied coinsurance rate of each dollar of spending is 33% higher. This is a weird set of incentives.
If we believe that there are too many low-risk, elective C-sections that don’t offer improved value over vaginal births, and if we believe that cost sharing influences decision making at the margin, we should structure our cost sharing so that vaginal births are much cheaper than elective, low risk C-sections. Right now, the insurance structure that is being reported in this paper is removing strong incentives away from vaginal births over the marginal C-section.
MobiusKlein
Consumers often see higher price as a mark of quality, or premium value.
By making c-section a higher price, do we risk giving it undeserved status?
Capri
Can something you are unaware of be an incentive? I highly recommend the book The Price We Pay by Marty Makary. There is a chapter that analyzes C-section incentives and costs. For doctors the convenience and fear of law suites is the major driver as they are totally unaware of the costs apart from some vague notion that surgery will be more expensive than no surgery.
I am an academic veterinarian and my son is a physician currently doing a residency. He attended the veterinary rounds for the cases under my care one morning when he was home over the holidays. The one thing that really struck him about the cases that were presented (with their EMR on the screen so that everyone could see relevant data) was that the costs – estimate for the stay and the costs spent so far were front and center on the record. He related that there is no place to see equivalent data on his EMR records.
Marge Feiner
It amazes me that any woman to elect to have a C section. Having had 3 vaginal births and known many women who had C sections I know that recovery from a vaginal birth is so much quicker and easier. I think that since most women work they elect a C section so that they can plan their leave time. Maybe if we had more liberal family leave they wouldn’t feel compelled to do that.
A2er
@Marge Feiner: I ran a health center (8 docs) and talking to Ob/gyns it was obvious that they much preferred c-sections. Easy to schedule instead of being on call waiting for a call. And more money! Best of both worlds from their perspective!
Not for the patient…
Scott
Not directly relevant to the vaginal/C-section discussion but what drives the huge increase in general costs for either method. My son and wife had their daughter on 31 Dec by inducement a year ago (date chosen for purely financial reasons as the scheduled inducement was for 3 Jan until they realized that deductibles, etc reset at 1 Jan. But that’s another story!). They had their own room, another adjoining room for us (the family) and all kinds of amenities that were not necesarily essential. Seems to me that such medically unnecessary things should be optional and not buried in the insurance costs.
Barbara
Payment policy for C-section versus vaginal delivery is a great example of how physician payment is based on “resources” rather than “value,” and further, how that distorts medical care in so many ways it is almost pointless to try to tinker around the edges. The medical profession considers procedures of all kinds to be “resource intensive” compared to the rendering of less invasive care that often requires more judgment and more time. This is true throughout most physician fee schedules, and “incentives” to reduce marginal procedures, like unnecessary c-sections, are nearly useless because they are asking physicians to forego revenue that is certain for incentive based payments that are only potential, and that might or might not make up for the lost professional service revenue.
gene108
@Capri:
I really wish we could force hospitals to have some sort of rational pricing model, which is transparent or at least, not as maddeningly opaque, and arbitrary.
I don’t how we can improve healthcare, if we don’t know where the break even point is for hospitals.
KithKanan
David, is it just me or does the lower cost-sharing percentage for c-section vs vaginal delivery imply that either option is causing a large number of patients to approach or reach their annual max out of pocket? Assuming those “standardized costs” are allowable amounts, all three options my work offers ($3500 ded HSA PPO, $3K ded/30% coins trad PPO, $500 ded/20% coins trad PPO) would be maxed out by both.
I suppose it’s also possible that they’re also on HMO plans with a fixed copay that is very similar (or even doesn’t distinguish) between the two options, I’ve never had a plan like that so I’m not particularly familiar with how they work
L85NJGT
The WHO estimates 15% of births should be c-sections, the US is around 33%.
@gene108:
They’re like hotels – occupancy rate drives the revenue curve. Which makes scheduling c-sections very attractive in matching demand and capacity.
Feathers
@L85NJGT: There was a study showing that the WHO rate is far too low. No longer have access to resources of old academic job, but study compared C section rates and adverse birth outcomes internationally. IIRC the lowest c section rate compatible with acceptable birth outcomes was in the 25 % range.
The main issue is that c sections used to be avoided through forceps deliveries. The doctors with forceps experience are reaching retirement age and younger doctors (and patients!) see them as unacceptably high risk.
I can see some sort of cost hit to discourage scheduled c sections, but I’m guessing that it will be hard to implement, and largely end up penalizing women with high risk pregnancies.
David Anderson
@Scott: I will be riffing on this soon (my daughter was a 2:00pm New Years Day baby)
JMS
My kids are 18 and 16 so things have clearly changed, but when I had them, the very normal health insurance I had through work had a policy whereby once you were confirmed pregnant, that visit where you had the pregnancy test was the only time you had to pay anything out of pocket right through the post partum follow up exam. This included visits, tests, the delivery, screening the newborn, lactation consult, anesthesia, everything. In fact, my firstborn had jaundice and was rehospitalized and insurance paid for that 100% too. I remember feeling at the time like I was getting away with something, but it took away a source of stress at a time when I had other things to worry about. In fact, with each child I took 16 weeks of leave, half of which was unpaid, which was somewhat of a stretch financially but would have been impossible if also paying so much out of pocket for medical care. Have things changed so much in 16 years that this kind of coverage can’t happen anymore? Seems short sighted and very family unfriendly.
TomatoQueen
@JMS: Things are different today to be sure. I had a similar policy to yours and saw no bills; I also had a forceps delivery, an episiotomy, and a severely handicapped baby in the end. At least I wasn’t writing checks at the 6 week checkup. This was also in the era of don’t tell your doctor’s staff your spouse is a lawyer as they may refuse to see you.
MobiusKlein
@JMS:
Similar for me, but 18 years ago for twins.
So much just showing up and not having bills shoved at us. It feels like torture to present expectant parents with $$$ choices they can’t know enough to sensibly decide, and have nothing but second guessing if things don’t go well.
EmbraceYourInnerCrone
@Marge Feiner: Firstly if a Csection is not emergent (like the one my mother had when she was hemorrhaging) it will be called elective/scheduled. Scheduled Csections can be done for many reasons large babies may be in danger of getting stuck (shoulder dystopia) if delivered vaginally. If a doctor think a large baby may be safer delivered by Csection they may recommend scheduling one. Not having a Csection in that case can result in permanent nerve damage to the baby’s arm. And pelvic floor damage for the mom. Twins are delivered via scheduled Csection often because for the second twin especially, vaginal delivery has more chance of death or complications.
Also the WHOs 15 percent recommended Csection rate was based on a number the two people recommending it made up. Rates of Csections for individual hospitals depend in what kind hospital it is, a local community hospital is not necessarily going to deliver anything that might tend to develop complications. Twins, premies, placenta previa, all tend to be scheduled by the OB or maternal fetal medicine specialist at a hospital with a level 3 NICU. Such hospital will have a higher rate of CSection and a higher rate of neonatal mortality Because they deal with the sickest babies.
If you have a Csection because the doctor sees a potential problem. And the baby is delivered and is fine it means you avoided possible damage or death in many cases. You can not know what would have happened it you had delivered vaginally. A lot of parents don’t want to just wait and see if a potential problem becomes an emergency.