The Illenbergers wanted to have a home birth. To do this, they contracted with a Licensed Midwife. The birth was successful and the mother and baby are happy and healthy. But Blue Shield of California refused to pay for any of the cost. The cost of hiring the LM was $4500. WebMD reports that a vaginal birth in a hospital costs about $9,600, and the cost of an uncomplicated cesarean section was about $15,800 in 2008. So why didn’t Blue Shield pay for the less expensive care. The Healthcare Economist can think of 4 reasons.
The most likely possibility why this is not covered is that the insurance company is worried that it will get sued. If a problem occurs in home birth setting, the parent could sue the insurer for millions of dollars. Typically, however, the lawsuits are made against the provider rather than the insurer. Legal costs would have to be more than $5000 per home birth to make it less cost effective than a hospitalization.
Although the direct costs of a home birth are less than a hospital, monitoring cost could be significant. Because the care is provided at home, fraudulent home birth claims may be a problem. To prevent patients from filing false home birth claims, insurers may need to set up additional monitoring infrastructure. Fraud for home health services is already a significant problem. Home births, however, are much more easier to monitor than home health care because one could require a birth certificate and the same parent could not file for a home birth claim more than once every 9 months. Thus, this seems to be a real but significant problem.
ObGYNs may not want to have beneficiaries to have a home birth option; this takes business away from their practice. The ObGYNs may say that if the insurer includes a home birth benefits, they would raise their rates for other non-pregnancy related services. Thus, although insurers could save money on births, higher ObGYN rates may increase overall cost.
If the insurer covers a home birth and there is adverse event, there may be significant media attention stating that the insurer was trying to save cost by permitting home births and this effort resulted in worse patient outcomes. As long as the patient has a choice to have a birth in a hospital or at home, however, this should not be an issue.
Insurance companies are bureaucracies and bureaucracies are slow to change.
Do any of these reasons explain why Blue Shield did not pay for a home birth? Can you think of others?