How much does it cost to bring a new life into the world? According toKFF, the average price tag for a delivery in the United States is over $20,000. If you have had a baby in the last five years, you likely know that this sticker price rarely reflects the final bill. While insurance typically covers the main share of the cost, families are still left paying an average out of pocket bill of almost $3,000.
While a couple grand may seem manageable compared to tens of thousands of dollars, it can be a daunting cost for growing a family. This becomes even worse when you factor in the cost of rising monthly premiums. As the cost of living climbs, hospital deliveries are following suit. However, the solution to lowering these costs for everyone may be counterintuitive to what you expect.
The NYS Department of Health reports that over 43% of Upstate New York residents are covered by Medicaid. Given this massive subset, this means Medicaid’s reimbursement rates dictate the financial health of labor and delivery units, particularly for community hospitals. Currently, Medicaid is a heavy burden for units. The American Hospital Association reports that Medicaid reimbursements often leave hospitals with an 8.1% loss on every delivery they perform.
When nearly half of your patients result in a financial loss, hospitals must find a way to keep the lights on. A study published by the NIH reveals the answer is to pass the deficit onto private insurance holders, charging those patients more to make up for lost margins. This is why the Health Care Cost Institute found that private insurers compensate hospitals almost $9,000 more than Medicaid per delivery. Essentially, every family with private insurance is paying a hidden tax to subsidize the government”s underfunding of Medicaid.
For many hospitals, even overcharging private insurers isn’t enough. Labor and delivery units are increasingly viewed as financial liabilities. The Times Union reports at least 29 hospitals have closed or reduced services in New York over the last 15 years. This reflects a national crisis. UPENN found that between 2010 and 2022, 537 hospitals across the country closed their obstetric units. What was the primary driver cited for these closures? Financial constraints in relation to inadequate Medicaid reimbursement.
We have already seen units close in Schuyler, Geneva, and Olean. While it may seem unthinkable, all it would take is a few years of sustained deficits for Cayuga Medical Center to face a similar crossroads. If CMC’s unit closed, Ithaca would become a maternal care desert. Expectant parents would be forced to navigate the 45 to 60 minute trek to Syracuse, Sayre, or Elmira. This is a terrifying prospect during a Finger Lakes winter or a high-risk complication. The NIH shows that as the distance to maternal care increases, so do the rates of complications and negative outcomes for both mothers and infants.
We can break this cycle by passing the Keeping Obstetrics Local Act (KOLA) (H.R.3942). This legislation targets the root of the problem by addressing the inadequate compensation hospitals receive per birth. Specifically, the Act would require state Medicaid programs to reimburse hospitals at 150% of the Medicare rate. KFF estimates New York hospitals currently receive only about 83% of their costs from Medicaid. This shift would provide the financial floor necessary to keep rural hospitals, like Cayuga Medical Center operational.
Critics may argue that increased federal spending leads to higher taxation. However, we are already paying this cost. We pay through inflated private insurance premiums or the devastating long-term costs of maternal morbidity. By fully funding these deliveries we prevent further unit closures, like here in the Finger Lakes, and reduce the cost shift passed onto every American family.
KOLA is currently under review by the Committee on Energy and Commerce and the Committee on Ways and Means. Its future remains uncertain, but as New Yorkers, we hold unique influence. Senator Chuck Schumer, as the Senate Minority Leader, has the power to exert immense pressure to prioritize this bill. Expressing support to his office emphasizes that maternal health is a non-negotiable priority for his constituents. Likewise, urging Senator Kirsten Gillibrand to co-sponsor the bill can provide the momentum needed to push it to the floor.
It has become too expensive, and in many places, too dangerous to have a baby in this country. Without intervention, maternal care deserts will continue to expand. Costs will continue to climb. We must support the Keeping Obstetrics Local Act to protect the future families of Ithaca and the Finger Lakes. A safe delivery must be a right, not a luxury.
Lucas Hooker is a Medical Student at Upstate Medical University.