Almost a decade has passed since the Institute of Medicine published the findings of the Committee on Understanding Premature Birth and Assuring Healthy Outcomes, a meeting of luminaries charged with defining and addressing the broadest spectrum of consequences of premature birth. Among its most important findings, that group highlighted the economic burden of prematurity:
“On the basis of new estimates provided by the committee, the annual societal economic burden associated with preterm birth in the United States was at least $26.2 billion in 2005, or $51,600 per infant born preterm. Nearly two-thirds of the societal cost was accounted for by medical care. The share that medical care services contributed to the total cost was $16.9 billion ($33,200 per preterm infant), with more than 85 percent of those medical care services delivered in infancy. Maternal delivery costs contributed another $1.9 billion ($3,800 per preterm infant). Early intervention services cost an estimated $611 million ($1,200 per infant), whereas special education services associated with a higher prevalence of four disabling conditions, including cerebral palsy, mental retardation, vision impairment, and hearing loss among premature infants added $1.1 billion ($2,200 per preterm infant). Lost household and labor market productivity associated with those disabling conditions contributed $5.7 billion ($11,200 per preterm infant).”
In today’s dollars, assuming that prematurity inflation was in line with medical inflation, the cost of prematurity would be 36.2 billion dollars. Even that value is likely an underestimate: the IOM numbers did not include certain maternal costs (such as those unrelated to the delivery admission), and long-term costs (both later medical expenditures and non-medical costs, such as lost wages) were included only for a few select conditions. Moreover, this value is just for prematurity, not for care of sick neonates in the NICU, many of whom are term infants with congenital anomalies or acute conditions like sepsis.
Last week, the Health Care Cost Institute released a report on children’s health spending that is important to us for several reasons: i) it adds some more information on spending in infancy beyond prematurity; ii) it helps to put the prematurity values in the context of pediatric healthcare expenditures in general and iii) our graduates live in a world in which issues such as out-of-pocket cost burdens are important for families. The HCCI report targets expenditures in the ~50% of children who are covered by employer-sponsored health insurance (ESI), using a nationally representative, weighted sample of 10.2 million children per year between 2010 and 2014, corresponding to ~25% of the privately insured children in the US. Here are a few take-home points that are most relevant for us in neonatology:
- Per capita health expenditure in 2014, the most recent year examined, was $2660. If we apply that to the 78,118,600 children aged 18 and under in the US, total spending would be be on the order of $207.8 billion (my own calculation, and with a couple of assumptions about generalizing from ESI to the general population, but a good ballpark). That means that prematurity medical spending ($22.8 billion from IOM, adjusted to 2014) might constitute as much as 10.9 percent of all health care spending in children, and other neonatal conditions would add even more.
- Out-of-pocket expenditures, here defined as copayments, coinsurance and deductibles, were $472. Importantly, this does not include out-of-pocket expenditures for items other than insurance, such as durable medical devices, drugs for individuals without pharmacy coverage, and wage losses. Work by our group, which will be the subject of a future post, suggests that these costs can be substantial.
- Spending grew at an average rate of 5.1 percent per year, much faster than the consumer rate, which ran at about 1.7% over the same period. Although slightly lower in the most recent year examined, the inflation rate is still double the general consumer price index rate.
- Utilization of services declined in almost all categories of services examined (acute inpatient admissions were stable, and generic drugs rose modestly), but prices increased in all categories. Since total cost = utilization x price, this means that most of the increase in expenditures was driven by price. This has very important implications for our work to address value. At the front line, most of our efforts focus on decreasing utilization (reducing ing length of stay or readmissions, for example), but the HCCI data suggests that policy efforts will also have to address prices.
- Spending was highest for children 0-3 years of age, mostly driven by newborn admissions, and increased at a rate of 4.9%, similar to that for children overall. Spending on newborn admissions was $1219 in 2014, and had increased by 6.9% over the study period. Out-of-pocket (insurance-related) expenditures were fairly low, though, running at $68 per capita for newborn inpatient stays, likely related to low cost-sharing in claims for this type of admission.
So what do the results from these two selected studies mean for us in neonatology? Costs for prematurity are high, they represent a substantial portion of pediatric expenditures, those expenditures are increasing at a fast rate, families of children shoulder a substantial out-of-pocket burden, and price increases rather than just utilization are an important part of the equation. Addressing Value is an imperative for us as neonatologists, as pediatricians, and as voters, and the process going to have to take into account all of these findings.
Delivering Newborn Care 