If Roe v. Wade is overturned, as now seems imminent, state legislatures will once again wield full authority over abortion law. Roughly half of U.S. states are poised to restrict abortion access. This ranges from total and near-total bans in states such as Texas to bans beyond 6-weeks in states like Iowa. With significant new restrictions on abortion on the horizon, maternal healthcare issues have taken on new significance, particularly for the majority of parents enrolled in private coverage.

Surveys of women who have had an abortion suggest that household finances figure heavily in this decision. In the most recent high-quality survey examining this, 73 percent of women who have had abortions identified “can’t afford a baby right now” as an important motivating factor. After all, the birth of a child is often the costliest medical event a woman will have faced up until that point.

Childbirth is expensive

High out-of-pocket costs are still a problem for over half of total U.S births covered through private insurance. While the Affordable Care Act (ACA) requires private insurers to cover childbirth-related services, that doesn’t stop insurers from subjecting these services to deductibles, coinsurance, and copays. Requiring first-dollar coverage for childbirth-related health care can hugely impact American families. The problem of out-of-pocket burdens for childbirth-related care is largely relegated to mothers with private coverage as Medicaid is required by federal law to exempt pregnancy care from cost-sharing. Childbirth costs have ballooned for families on private insurance due to rising deductibles. For families covered by employer-sponsored insurance, the average out-of-pocket costs for maternity care are estimated to have grown from $3000 in 2008 to over $4500 in 2015. In some cases, families may face a bill of $10,000 or even $15,000 for childbirth-related medical services. 

Expectant parents and parents of young children are typically more cash-strapped than parents with older kids. They also experience less stable health insurance coverage, due to pregnancy-related changes in labor force participation and shifting eligibility for Medicaid and Children’s Health Insurance Program (CHIP) before, during, and immediately after childbirth. Insulating pregnant women from pregnancy-related costs is likely to yield substantial benefits through various channels, particularly in terms of child development due to improved maternal nutrition and reduced stress. Policymakers should attempt to minimize both the strain on household finances and coverage-related uncertainties and hassles. This could be achieved through a consistent and categorical exemption of these services from cost-sharing across all forms of insurance.

For those on private health insurance, the status quo penalizes families for their childbearing decisions. Households attempting to conceive implicitly subsidize households that aren’t. The contraceptive coverage mandate, for example, excludes certain forms of birth control from any sort of explicit cost-sharing, and these increased costs are passed onto families that are actively trying to have kids through higher taxes and premiums. Ensuring first-dollar coverage is similarly provided for maternity-related services reimbursed by private insurers would rectify this imbalance.

Policy options

The most straightforward way to insulate new and expectant mothers from the high cost of childbirth would be to amend the ACA marketplace regulations and ERISA statutes governing employer health benefits to guarantee that pregnancy and maternity-related care have first-dollar coverage as with many preventative services. The best way to finance these options depends on the source of the insurance.

Financing first-dollar maternity coverage on the individual marketplace

Financing on the community-rated individual marketplace could be achieved by spreading the cost among plan enrollees as well as more explicitly through either expanded reinsurance, risk adjustment, or even a dedicated per-pregnant-enrollee payment. In determining the appropriate sources and financing levels, policymakers would want to insulate mothers from the cost of pregnancy and other maternal care without causing an unacceptable spike in premiums. 

Financing first-dollar maternity coverage on employer-sponsored group plans

Eliminating out-of-pocket costs for childbirth-related costs is a bit trickier on the employer-sponsored side of the insurance market. Most businesses offering their employees health insurance, and especially larger employers, are self-insured meaning the financing base for the insurance directly corresponds to the risk pool. In other words, premiums paid by the firm and its employees more or less equal total health care spending by the firm’s employees. As a result, failure to design policy properly could raise the relative cost of hiring women and encourage discrimination. To address these tendencies on the employer-side, policymakers have two main options.

The first option is to buttress against these tendencies by either redistributing across disparate group-plans through risk adjustment or retrospectively reimbursing group-plans for a share of maternity-related expenses. Changes of this sort would be quite novel for group-plans on the employer market, which have traditionally been lightly regulated and subsidized in a hands-off manner via the tax exclusion for employer-provided insurance. But the fact that it’s not in employers’ interests to ensure that childbearing is affordable shouldn’t deter lawmakers from enacting policies that would make it so.

The alternative is to lean into a likely outflow of enrollees from group-based coverage onto the individual marketplace exchanges. Rule-making under the Trump administration that expanded employers’ ability to reimburse employee purchases of individual marketplace insurance through an Individual Coverage Health Reimbursement Arrangement (ICHRA) would help facilitate this option. Further steps in this direction could be made with additional policymaking aimed at eroding the firewall between the individual and group-based health insurance markets.

American health insurance is unusually inhospitable to childbearing, and providing first-dollar coverage for maternity-related care expenses is the best place to rectify this. Other problems, such as the high rate of health insurance churn among pregnant women, should certainly also be addressed. As countries such as the Netherlands demonstrate, a health system that relies on private insurance can be abundantly supportive of families given the proper policy environment. In light of likely upcoming changes to abortion policy, now is as good a time as any to ensure that our health care system is as accommodative to childbirth as possible.

   


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