This week, Senators Cindy Hyde-Smith (R-MS), Tim Kaine (D-VA), Josh Hawley (R-MO), and Kristen Gillibrand (D-NY) introduced the Supporting Healthy Moms and Babies Act, a bill that would make childbirth effectively free for families covered by private health insurance. The legislation designates prenatal, birth, and postpartum care as essential health benefits (EHBs) and eliminates cost-sharing from these services. The bill would provide families with greater financial stability by requiring insurance plans to fully cover childbirth allowing parents to focus on their children’s well-being without the burden of high medical expenses. While this change may result in a modest increase in insurance premiums, it ensures more predictable healthcare costs for families.
Maternity and newborn care is subject to cost sharing in all commercial insurance plans. This bill would eliminate those costs for all in-network childbirth services, and out-of-network care when no in-network provider is available.
For parents in the individual and small-group markets, the Affordable Care Act (ACA) already requires qualified health plans to cover essential health benefits, including maternity and newborn care. The new legislation expands the definition of essential childbirth services and ensures qualified health plans cover them without cost sharing.
The bill mandates full coverage for ultrasounds, miscarriage care, delivery services, and postpartum care for up to a year after birth. Additionally, beyond general postpartum mental health care, it introduces—for the first time—mental health coverage for spouses and adoptive parents, recognizing the broader emotional and psychological needs of growing families.
Reducing costs and confusion for new families
The Medicaid program already covers the full cost of birth for enrolled families, accounting for 41 percent of births in America. However, for the remaining pregnancies covered by private insurance, parents typically pay approximately $3,000 out-of-pocket (OOP). That number is much higher for some families with high deductible health plans (HDHP), or who have additional health complications during pregnancy, or have gaps in their coverage.
One major factor driving high out-of-pocket costs is the timing of a pregnancy. Families welcoming a child in January, for example, may be forced to meet their insurance deductible twice—once for prenatal care in the previous year and again for delivery in the new year.
For those with HDHP plans, where deductibles range from $2,500 to $5,000, total out-of-pocket expenses could reach $5,000 to $10,000. This financial strain affects over 17% of privately insured parents, burdening new families with debt on top of the many costs of raising a newborn.
A recent Peterson-KFF analysis highlights the impact: new mothers are twice as likely to carry medical debt compared to young women who did not give birth. Eleven percent of new mothers—about 400,000 annually—report medical debt exceeding $1,000.
Beyond the high costs, childbirth expenses are notoriously difficult to predict due to significant price variations across hospitals and regions. As the Washington Post reported, determining out-of-pocket costs by contacting the hospital is often futile–hospitals provide different prices online than over the phone, making it nearly impossible for parents to plan effectively. Even estimated costs for “uncomplicated labor and delivery” vary widely by hospital, leaving families unprepared for the actual financial burden of childbirth.
These financial consequences, reporting discrepancies, and lack of transparency underscore the urgent need to eliminate cost-sharing for childbirth and ensure health insurance fully covers these essential services. By doing so, we can provide families with greater financial predictability, reduce medical debt, and allow new parents to plan for their future with confidence.
Effect on insurance premiums
There are multiple ways to achieve fully covered childbirth in the U.S., and we have previously explored various strategies and their merits. This proposal takes a direct approach by eliminating all cost-sharing in commercial markets for childbirth services and adding them to the list of essential health benefits under the ACA. Rather than restructuring the entire system, this legislation simply requires insurance companies to cover the remaining out-of-pocket costs for parents.
Regarding health insurance premiums, two factors limit the population affected by this reform:
- Most privately insured parents will meet their deductible because the total costs of pregnancy are around $19,000, and the typical deductible amount is $3,811 for family coverage and $1,992 for individuals.
- Medicaid already covers 4 in 10 pregnancies, meaning this analysis only applies to privately insured pregnancies.
The model below outlines potential outcomes for insurance risk pools based on the birth rate among privately insured individuals, current out-of-pocket costs, and average annual insurance premiums. Private insurance covers 51.2% of births, equating to 1,838,760 total births annually. Since 178 million people are primarily covered by private insurance, this translates to approximately 10 births per 1,000 privately insured individuals.
We also included scenarios for pregnancy rates of 5 and 20 out of 1,000 to account for variability in insurance risk pools. The average out-of-pocket costs for a privately insured pregnancy are $2,854, but expenses can vary significantly depending on the timing of the pregnancy and the deductible structure. To reflect this range, our model considers costs up to $6,000.
For context, the average annual premium for private health insurance is $8,435 for single coverage and $23,968 for family coverage. Our model estimates the percentage increase in premiums based on both figures.
Figure 1. Family Plans: Estimated Effect on Premiums by Adding Pregnancy Costs
Figure 2. Individual Plans: Estimated Effect on Premiums by Adding Pregnancy Costs
The range of premium increases based only on the average out-of-pocket cost would be between 0.06 and 0.3 percent for family coverage (see Figure 1) and 0.2 and 0.8 percent for individual coverage (see Figure 2). If a given risk pool experiences double the average pregnancies–and those pregnancies have double the average out-of-pocket costs–the annual premium range increase is between 0.5 and 1.5 percent. For context, premiums for single and family coverage increased by 7 percent in 2023 and 6 percent in 2024. Any rise in premiums resulting from covering out-of-pocket pregnancy costs is likely to be modest. In fact, it will likely be smaller than the typical annual inflation in premiums.
In actual dollar terms, this means:
- For the average employee risk pool with typical out-of-pocket (OOP) costs, premiums could increase by approximately $30 per enrollee per year.
- For a higher-risk pool—where the birth rate is double the average, but OOP costs remain typical—premiums could rise by about $60 per enrollee per year.
Who bears the cost?
- Employer-sponsored insurance plans: Under these plans, the employer generally absorbs the increase in premiums. However, employees are still responsible for a portion of the cost:
- Employees typically pay 17% of premiums for individual plans and 29% for family plans.
- Workers in small firms often pay a higher percentage than those in larger firms.
- ACA Individual Marketplace Plans: For those insured through the ACA marketplace, the individual bears the full cost increase. However, many will be able to offset some of the increase through subsidies, which help reduce the amount they pay out of pocket.
Effect on overall costs
One concern that may arise from making childbirth services free for parents is whether it will lead to increased utilization of childbirth-related services, such as more births and heavier use of services during pregnancy. Pregnancy is already costly, with private insurers paying hospitals around $19,000 per pregnancy, with $3,000 of that covered by the patient out-of-pocket. This cost has risen due to increasingly higher prices for pregnancy services and the growing prevalence of C-section deliveries in recent decades.
While this reform’s effect on prices is unclear, the impact on overall costs will likely be minimal. Many c-sections are unplanned and not the result of elective decisions to use more expensive services. Therefore, the primary drivers of higher childbirth costs–rising prices and unnecessary c-sections–will not be directly accelerated by a potentially modest increase in the use of childbirth services.
The effect on the birth rate will also likely be limited. Although a cost-sharing arrangement of this kind has not been implemented for privately insured individuals in the U.S., previous Medicaid expansions for individuals with higher incomes have shown negligible to modest effects on fertility. Because the population targeted by this reform has a higher income than the Medicaid population, their sensitivity to reduced costs will likely be less pronounced.
Bottom line
Requiring insurance to cover pregnancy out-of-pocket costs will likely lead to a modest increase in insurance premiums. However, this is a worthwhile tradeoff, as it will shield parents from the financial uncertainty and high out-of-pocket costs associated with childbirth. The Supporting Healthy Moms and Babies Act will allow parents to better plan for their future during a financially vulnerable time and allocate more resources toward their children’s care.