Sunday, February 19, 2012

Childbirth Freedom Would Save Illinois Medicaid $5 Million Annually

How much money could Illinois Medicaid save by integrating Certified Professional Midwives into the system? While a scientific answer is not available, there is plenty of evidence suggesting the answer is in the ball park of five million dollars a year.

It's no secret that Certified Professional Midwives offer cost-effective care. No one knows this better than Jeffery Thomspon MD MPH, Chief Medical Officer for Medicaid, Washington state. Recognizing the important role Certified Professional Midwives play in reducing Medicaid costs in Washington state, Dr. Thompson is encouraging the US Congress to pass federal legislation to ensure Medicaid coverage for Certified Professional Midwives nationally.

Years ago Washington state commissioned a health management firm
to study this issue. The report documents cost savings of $473,000 per biennium
as well as quality improvements (better birth outcomes). The study, published in 2007, included
births from 2001-2004. In 2009 however, the Health and Recovery
Services Administration in Washington revised the total savings to $3.1
million per biennium.

How does this relate to birth in Illinois today? Illinois is about twice as big as Washington in terms of the numbers of babies born each year as well as in terms of each state's Medicaid budget. Also the two states have similar rates of Medicaid-paid births (2008: 47.5% of IL births were paid by Medicaid and 47.8% of WA births were financed by Medicaid. See National Vital Statistics Reports and Kaiser Family State Health Facts.)

If Illinois embraced midwifery care as much as Washington does, Illinois would experience about twice as many births attended by Certified Professional Midwives as Washington does; and likewise, Illinois' potential reductions in Medicaid expenditures would be about twice as those experienced in Washington. Thus I am using an estimate of $3.1 million per year in 2004 dollars as Illinois' lost Medicaid savings. In other words, if Illinois followed Washington's home birth example back in 2004, Illinois Medicaid would have spent $3.1 million less.

According to Milliman statistics, health care costs have increased 73% since 2004. A seventy-three percent increase on $3.1 million is $5.4 million. The Illinois Policy Institute reports Illinois' Medicaid liabilities increase at a rate of 6.9% per year. A 6.9% compounded rate of increase on $3.1 million from 2004 to 2012 is $5.3 million.

Surprisingly, the "Home Birth Medicaid Bonus" results from just 2%. It only takes 2% of births to be delivered at home instead of the hospital to realize these huge cost savings. The 2% represent Birth Freedom. When given the freedom, about 2% of US moms choose home birth. The Home Birth Medicaid Bonus is achieved by granting mothers freedom -- freedom to deliver with state licensed, nationally-certified, maternity care professionals. Currently Illinois mothers are denied this freedom, and Illinois tax payers are paying for it at the cost of about $5 million per year.

It's time for the Illinois General Assembly to pass the Home Birth Safety Act (HB5370). The Home Birth Safety Act calls for licensure of Certified Professional Midwives based on national midwifery standards. It also will recognize Certified Professional Midwifes as Medicaid providers.


  1. It just seems like common sense to provide this option for women who want it. Not only does it give mothers on Medicaid more options, it has the potential to save taxpayers a huge amount of money. Seems like a win/win.

  2. As an economist who conducts research on the safety and cost of births in homes, hospitals, and birthing centers, I write in support of this proposal. On the basis of my estimate of the cost savings from similar options at the national level, I feel confident that the $5 million in savings suggested by Ms. Breen is just the tip of the iceberg.