C-sections and insurance

I posted a recent press release about how that some women are being denied insurance coverage after having a C-section, unless they can show that they are infertile or have become sterilized. I want to discuss this some more.

Please note that I am not defending any insurance company’s actions — just talking about it.

In America, health insurance companies are for-profit companies, just like Wal-Mart, Burger King, and Radio Shack. If they cease to make a profit, they cease to exist. Just for kicks, I got an instant quote for an individual of my age from my state’s Blue Cross / Blue Shield, and found that (depending on which of the 2 plans were offered), maternity insurance would cost about $300 per month, if I had a $1000 deductible. [This is in addition to the approximately $200 per month for regular health insurance.)

A year ago, a friend of mine had an uncomplicated C-section due to the baby’s transverse lie (baby was positioned sideways in relation to her abdomen, instead of head-down which is the norm). The total hospital charge (not counting the doctor’s fees) was $25,000, of which my friend had to pay 20% or $5,000. That meant that the insurance company had to pick up the $20,000 tab. (Of course, most insurance companies usually have bargained with the hospitals and care providers for a certain maximum charge, so they may not have actually had to pay all of that, but for the sake of argument, let’s say that they did.) Now, $25,000 seems high for an uncomplicated C-section, and undoubtedly rates would vary based on the hospital, length of stay (my friend stayed less than 48 hours), if there were any infection or other complications, etc. But these are the figures I have to go with (if anybody wants to chime in with other known figures, please feel free to leave a comment — it will be interesting to see how much births cost in various parts of the country).

So, the insurance company had to pay $20,000. Although my friend said she just wouldn’t have any more children if she knew she’d have to have a C-section, let’s say that something happens in a future pregnancy and she does need a C-section (or can’t find a doctor or hospital that will allow VBACs). Assuming the same figures, the insurance company will have to fork over another $20,000. Then, let’s say that 5 years down the line, she has another baby by C-section. Now, the cost of the 3 C-sections to the insurance company is $60,000. While most people get health insurance through group coverage and get reduced premiums, let’s say that the cost of maternity insurance is $300 per month, which is what I figured. At this point, my friend would have paid $300/mo for 7 years for just her maternity coverage, or approximately $25,000 total. Then, she would also have to pay $5,000 per birth, or $15,000 out-of-pocket. [Remember, this is just for the hospital part of the birth — any doctor’s fees for the birth, or any prenatal visits are not included in this!] The cost to the insurance company, meanwhile, would be $60,000. They’d be $35,000 in the hole.

Remember, if the insurance company can’t make a profit, there’s no reason for them to exist — they are not a nonprofit organization. And if they can’t break even, they can’t survive. They can absorb the extra $35,000 for my friend, but what about for the other 30% of women who give birth via C-section every year?

In discussions I’ve had on my various birth-y email lists (childbirth educators, doulas, midwives, home-birthing women), we’ve often discussed this problem, and wondered aloud why insurance companies cover elective C-sections, but often don’t cover home births. My first midwife (a CNM in Illinois), said that insurance companies don’t cover home births for two reasons — the main one is that the people who sit on their boards to decide what they will and will not cover are doctors, and it’s sort of the “old boys’ club” and they just don’t like home birth so will not cover it. [As an aside, when Viagra was first available, I was working at a pharmacy, and was surprised to find that insurance companies covered Viagra. However, many of them did not cover birth control pills, because they said they were elective. I kid you not.] And a secondary reason is that if a woman plans a home birth with a midwife, and ends up transferring to the hospital (most midwives have about a 10% transfer rate for all reasons), then the insurance company may end up having to double-bill for the birth — one bill for the midwife for her prenatal care and labor care, and another bill for the hospital and doctors where the birth actually took place.

This blog had an interesting take on what to do — instead of legislation, or lobbying, or reaching women with the idea of homebirth, go to the Human Resources department of companies, and pitch covering homebirth and midwifery as being cost-effective and preventive care. [The author of the blog is also the author of The Ties that Bind, which is one of my favorite articles about birth.]

Let’s run some numbers. [Yes, I’m a nerd that way — if you don’t like numbers, you can skip to the end. :-)]

The US annual birth rate is approximately 4 million births per year, and planned home births comprise about 1% of that, or 40,000 births. I think the average cost of a home birth, with all the prenatal care and the one-on-one attention of a midwife throughout the whole labor comes to about $3,000 (which is about what it was for each of my two births). But let’s say that I’ve underestimated it, or we need to throw in some extra tests or ultrasounds or something, so we’ll “high-ball” it at $4,000 average across the nation. Since there is an average of 10% transfer rate to the hospital for any and every reason, 36,000 planned home births will be accomplished at home, while 4,000 will transfer to the hospital. Those 36,000 home births will cost $144 million. Let’s say that the average vaginal birth at a hospital costs $10,000 (and this includes all the prenatal visits and any doctor’s fees, so that figure is probably a bit low). Of the 4,000 women who transfer to the hospital, let’s say that half of them end up with a Cesarean (which is 5% of the total home-birthing group), while the other half go on to have a vaginal birth. That means that the 2,000 vaginal births will cost $20 million (paying the midwife’s prenatal fees but the doctor’s birth fee and the hospital charges out of that $10,000), while the 2,000 C-sections will cost $25,000 apiece or $50 million. So, the total cost of the 40,000 planned home births ends up being $214 million.

Now, let’s say these same women planned hospital births. While the current average C-section rate is 30%, about a third of those are planned repeat C-sections. Slightly less than a third of C-sections are due to “non-progressive labor,” while the remainder are for all other factors including fetal distress, breech or transverse position of the baby, maternal health factors, etc. I don’t know how many women have planned home VBACs (a.k.a. HBACs), so let’s just pretend that none of the 40,000 women fall into that category. Since women who plan to give birth at home are usually “low-risk” (no twins, triplets, etc.; no major health problems; no known placenta previa, etc.), we’ll also remove the 14% of C-sections that might occur for these reasons. So, we’ll say that 15% of these 40,000 women will statistically have a C-section in the hospital (which also coincides with the Listening to Mothers Survey, which found that half of the C-sections performed were unplanned). This means that 6,000 women will have a C-section, while 34,000 will have a vaginal birth. So, the cost of the C-sections will total $150 million, and the vaginal births will total $340 million, for a grand total of $490 million in the hospital.

Now, nationwide (assuming uncomplicated births, which is obviously not the case — we save a tremendous number of premature babies, and a large number of these are born by C-section), if 70% of the 4 million women have vaginal births that cost $10,000 apiece, and 30% of women have Cesareans at $25,000 apiece, we’re talking $58 billion per year that is spent on hospital births alone. Although not all women would want a home birth, and some women would be “risked out” of a home birth, let’s say that a third of American women could and would give birth at home (which is similar to the rate in the Netherlands), if they had the proper support, and if insurance covered it, etc. Assuming 30% instead of 1% home birth population (with the 10% transfer rate, and 5% C-section rate), it would save $11 billion per year in health-care costs.

Now, all those above figures are the total cost of the birth, as if paid by one entity. There are so many different types of insurance that it would be impractical to run numbers for all of them, but let’s say that the average person has to pay 20% of the copay for a birth (which is fairly common, at least in my area). Currently, many people who choose home births have to pay the entire amount out of pocket (although some insurance companies will cover home birth just like they would an obstetrician and hospital birth, while others will make the woman pay up-front and then reimburse her… or not). In my case, the cost of the total package of midwifery care and home birth ended up being less than my friend’s 20% of her C-section. If she had had a typical vaginal birth at a hospital, her out-of-pocket expenses would have been $2,000, which was about a third less than what my births cost. So, if consumers had to pay only 20% of $4,000 for a midwife-attended home birth, their portion would be $800, while the insurance company would pick up the remaining $3200. Running the numbers again, if insurance companies paid 80% of the 40,000/year planned home-birth costs, their expenses would be $171 million. If, because insurance companies don’t cover home birth, these 40,000 women go to the hospital, the insurance company will have to pay 80% of $490 million, or $392 million — more than twice what they would have to pay to cover home birth, even at a 10% transfer rate and having to pay a midwife, doctor, and hospital.

When will the insurance companies wake up? Right now, they seem to be beginning to, but some are doing it by refusing to cover women who have had a C-section. Doesn’t that strike you as “shutting the barn door after the cows have escaped”? But here it gets tricky — some C-sections are (or become) necessary. I don’t want doctors to refuse to do a necessary C-section because of the possibility that a faceless, soul-less insurance company might come behind him and deem it actually unnecessary and refuse to pay him. But I am all for reducing the C-section rate to a reasonable level. And if pressure from insurance companies helps, then I’m glad for that. Think about it this way — insurance companies tend not to pay for elective surgeries (cosmetic surgery, for example), so why should they pay for this one elective surgery? I think a better option for insurance companies to avoid the high costs of repeat C-sections is to avoid the initial C-section to begin with. They can start by refusing to cover elective C-sections, instead of not covering women who have already had C-sections. In a previous post, I ran some other numbers which seemed to indicate that the number of C-sections could easily be cut in half (mostly by doctors not practicing “defensive medicine” — waiting on nature instead of diagnosing “labor dystocia”, allowing VBACs, allowing some breech births — just in general not being so quick to cut women open). If the C-section rate were cut in half (even if all births continued to be at the hospital), the cost of birth would decrease by three billion dollars per year. That’s a lot of money!

Going back to a previous point — if insurance companies are forced to pay for unnecessary C-sections and repeat C-sections, then the cost of health insurance will go up. It has to. At $300/mo, it will take the insurance company about 5.5 years to recoup the cost of 1 C-section. In this time of changing companies and jobs and insurance providers, how many insurance companies are going to bet that after they’ve paid $20,000 for a C-section, the woman will continue to stay with their insurance and pay the maternity premium for 5&1/2 years, without having another baby (by C-section or not)? And every repeat C-section adds an addition $20,000 and an additional 5&1/2 years to recoup the cost. Certainly, there are a lot of women who have maternity coverage and do not use it — that’s how insurance companies operate and make money — they’re betting that you’ll pay in more than they pay out. But they understand the formulas, and they crunch the numbers, and they know how much they have to take in, in order to be profitable. With the rising rates of C-sections, and the falling VBAC rates, insurance companies are faced with two choices in order to stay in business — raise rates, or refuse to cover risky people. It’s the same way it’s always been. It’s just now that it’s hitting women who have few options when it comes to birth after Cesarean.


7 Responses

  1. Wow, now we just need some insurance company people to read this! 🙂

  2. I found this interesting and I also wanted to say that I am expecting #3 and it will be a planned c-section, I have no insurance and am receiving no help from state so I am totally private pay. The doctor is charging me $3600 for basic care and the delivery (all bloodwork, ultrasounds and complications are extra) The hospital I have chosen is going to cost $4800 for two day stay for me and baby (only if there are no complications) if and only if I pay upfront. If I wait until after the birth then the price goes up to $9000 for two days. Then there is the anethesiologist I will have to pay after the birth. So if I pay everything up front and there are no problems then I am looking at a total of about $10-12,000 for our little girl. Who, no matter what is totally worth every penny. My only problem with insurance right now is that not only can I not get coverage but neither can my fiance or our other two children because I am pregnant(after talking to about 15 insurance companies).

    Thanks for commenting on this. I’m glad to hear it won’t be nearly as much as my friend’s C-section. That’s a good point about getting a discount for paying up-front — I’ll have to remember that! -Kathy

  3. Well, I am an American who has recently moved to Holland. Anyone with a clue would never suggest that women should give birth at home. I mean who the heck would want to sleep in a bed, let alone ever have sex in that bed again after delivering a baby in it. Needless to mention the fact that it is archaic and inhumane that women get no pain relief here. You’d be better off dropping the kid in a field somewhere. If you have the means and the access to it, then planned C-Sections should totally be allowed. It sure is a hell of a lot better than having to suffer through pain in today’s world where the technology and the drugs exist to make that better.

  4. Actually, I do have a clue, and have birthed two babies at home. Neither one in my bed. The first was in a labor pool procured for the birth; and the second was in the bathroom. If you take just a cursory glance through recent history (of, say, the last 200-300 years), you’ll see that the majority of women gave birth in the home and had numerous children, so they obviously either didn’t mind having sex in the bed again, or did not actually give birth in it. My mother is currently sleeping in the bed (obviously different mattresses) where my Grandmother was born.

    I understand that in Holland epidurals and other forms of drugs are discouraged for pain relief, among women who want them. I am not necessarily advocating that. However, to say that C-section are pain-free is quite ignorant. I know several women who have had C-sections, and the recoveries from them were much worse than the recoveries from my vaginal births — one friend couldn’t get in and out of bed or a chair without assistance for three weeks, and another had to have an emergency operations a few months after her C-section to repair a problem caused by the C-section, so she is in the second of her 4-6 week recoveries for the birth of her second child. While C-sections are pain-free at the time, because of the drugs used to numb the body, the post-op and recovery phase are hardly pain-free. My first labor was 9 hours long; my second labor was 24 hours long. My recoveries were easy and essentially pain-free. I have never heard of a single woman who said that her C-section recovery was 33 hours or less — that the pain was gone by then. Give me a vaginal birth any day, even with all the pain attendant, over a C-section. C-sections take all the pain from the birth and put it *after* the baby is born, distracting women from their babies; while in vaginal births the pain happens entirely before the birth, freeing women to become totally absorbed in their babies once they are born.

    Feel free to plan your C-section if you want, but I will continue to give birth vaginally.

  5. I recently read a article about a study where a hospital followed a specific number of women through birth and hospital stay. They wanted to determine wich was more costly on average. The women who had chosen vaginal deliveries incurred more cost after all things considered. Women who had an elecive c section actually had the cheapest bills in the end.
    Perhaps insurance companies should look at women who choose to take fertility drugs and birth 6 babies that will be in ICU for months. They could also put a limit on number of births they will pay for. What about women who have 10, 12 or 18 kids! I really dont think the average women having c sections is that big of problem in comparison.

  6. Hailey,

    I’ve read something along those lines, but haven’t found the study. It would be interesting to read.

  7. Maternity insurance is a money loser for an insurance company when women can decide to add the coverage just before they decide to conceive and drop it after they have their child.

    One way to make this coverage affordable to consumers and profitable to the companies is to force them to add this coverage to every policy.

    This might make the coverage for a woman who is not planning on having a child $10 more each month.

    Without a mandate an insurance company is in a position of being asked to do something out of the goodness of their hearts that is not profitable to their stockholders.

    We shouldn’t expect them to do this. It is like expecting an athlete to intentionally carry a back pack with weights on it when competing when no one else is. Once all the athletes are compelled to do the same the better athlete will still win the race, but the athlete who does it when no one else does puts himself or herself at a distinct disadvantage.

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