Costs of poor birth outcomes among privately insured

Despite expansions in the public insurance coverage of pregnant women, concerns over poor birth outcomes remain. Poor birth outcomes occur among publicly and privately insured women, however, thereby imposing excess costs on employers and their insurers. Data from a large sample of privately insured for 1996 are used to examine these outcomes and costs. Almost one-fourth (24.3 percent) of the infants in our matched sample of 12,020 deliveries was premature or had other problems at birth. Costs for these infants accounted for 82 percent of the total $56 million spent on sample infants. The incremental cost of infants with poor birth outcomes versus those with normal, full-terms was approximately $14,600. We found that these relative costs had increased over time due perhaps to the increased technology and intensity of services used to save infant lives. We also found that factors other than maternal and infant complications affected cost variations. For example, employers located in the Northeast, hiring older mothers, and in unionized sectors have higher prenatal, delivery, and infant costs.