Medicaid expenditures for maternity and newborn care in America

Abstract

An Alan Guttmacher Institute (AGI) survey of the Medicaid programs in each state and the District of Columbia found that some 542,000 low-income women have a Medicaid-subsidized delivery each year--about 15 percent of all women who give birth. The proportion ranges from three percent in Alaska to 25 percent in Michigan. The federal and state governments spend almost $1.2 billion annually for maternity care (including prenatal, postpartum and newborn care); the average expenditure per patient is $2,200. Tennessee reports the highest expenditure per patient ($3,500) and Louisiana the lowest ($1,300). Only the highest payments under Medicaid are close to charges for maternity care in the open market, a fact that results in a significant disincentive for physicians and hospitals to accept Medicaid patients. The $1.2 billion spent for Medicaid-subsidized maternity care compares with an estimated $11.5 billion spent for such care nationwide. Thus, Medicaid pays for about 10 percent of the nation's maternity care bill, although Medicaid subsidizes deliveries for 15 percent of all women who give birth. The figures for maternity care do not include Medicaid expenditures for neonatal intensive care, which, for the 17 states reporting data, average about $11,800 per infant. Although only about six percent of all newborns whose deliveries are subsidized by Medicaid require neonatal intensive care, such care is so expensive that it adds about 30 percent to all Medicaid expenditures for maternity care. Increased Medicaid payments for maternity care, including prenatal care, could have a positive impact on health outcomes for low-income mothers and their babies, and could reduce the necessity for massive and expensive medical treatment for newborns.