In 2023, employer healthcare costs skyrocketed, with maternity costs as the first or second largest drivers. The trend shows no sign of slowing down, with costs for employers projected to rise a further 7% in 2024.
The financial burden extends to employees as well: accompanied by the rising costs facing employers, out-of-pocket costs for fertility and maternity care have also risen significantly. Maven's State of Women's and Family Health Benefits 2024 report finds that over two-thirds of employees are concerned about the rising costs of healthcare. Over a third are expecting to change how they access healthcare because of the costs—potentially delaying or not seeking treatment when needed.
Reducing maternity costs, and the financial burden they pose to employees, are a top priority for employers as inflation continues to rise. Mitigating these costs can help encourage healthcare and benefits utilization, especially during crucial life stages like the pregnancy and postpartum periods. What can employers do to minimize and control the cost of pregnancy and maternity? The first step is understanding the factors that drive them.
Why are pregnancy and childbirth costs so high in the U.S.?
Having a baby can be an emotionally and physically challenging experience. For many birthing people in the U.S., even those with private insurance, paying for it adds an additional layer of stress. A recent analysis by KFF found that people who give birth are, on average, paying over $3,000 in out-of-pocket costs after giving birth.
There are a number of reasons why birth care is so expensive in the U.S., including:
- Limited access to maternity and reproductive health care
- High deductible health plans
- Increased number of C-sections
- Poor mental health support
- Limited prenatal care
- Lack of fertility coverage
Average childbirth costs
To understand the cost of pregnancy and maternity in the workplace, it can be helpful first to look at the expense of childbirth in broader terms. Many factors influence the overall medical costs and out-of-pocket payments, including the level of health insurance coverage and the length of the hospital stay.
Overall, people who give birth incur $18,865 in additional healthcare costs compared to those who don't give birth. Of this, $16,011 is covered by insurance, leaving $2,854 to be paid out of pocket.
The type of delivery can also affect health costs. An uncomplicated vaginal birth typically costs the least, at approximately $14,768, with $12,113 covered by health insurance and $2,655 paid out of pocket. A cesarean delivery, in contrast, averages $26,280, with $23,066 covered by health insurance and $3,214 in out of pocket costs.
The financial concerns of pregnancy and maternity
If employers want to truly support their employees throughout pregnancy, childbirth and postpartum, they must understand the financial concerns that prospective and new parents have. A cross-sectional study of postpartum women found that financial hardship was a common experience in the U.S. 24% reported unmet healthcare needs, 60% reported health care unaffordability, and 54% reported general financial stress.
There are many factors that can contribute to financial concern during pregnancy and maternity, with the experience of individuals differing vastly depending on their health insurance plan, income, and demographics.
Health insurance coverage
Many individuals may be concerned about the extent of their health insurance coverage for medical bills associated with prenatal care, labor and delivery, and postnatal care. While all Marketplace and Medicaid plans cover pregnancy and childbirth, the extent of coverage does vary. Furthermore, 49% of Americans get their health insurance through their employers, yet large employers with more than 50 employees are not required to comply with the essential health benefit requirements outlined under the Affordable Care Act. There are also approximately 4.2 million women aged 19-25 in the U.S on their parent’s employer insurance plan, where maternity care for adult dependents isn’t covered.
Uninsured costs
Although the number of Americans without health insurance continues to fall, there are still many without any health insurance at all and others with health insurance plans with inadequate coverage. Those without health insurance coverage face even higher medical bills and health care expenses, which can result in substantial financial strain.
The Employer Mandate under the Affordable Care Act requires employers with 50 or more employees to offer health insurance that is affordable and provides minimum value to their full-time employees, or be subject to penalties. Despite this, there are still gaps in care.
Data from the Commonwealth Fund Biennial Health Insurance Survey reveals that 43% percent of working-age adults were inadequately insured in 2022. 9% were uninsured, 11% had a gap in coverage over the past year, and 23% were insured all year but were underinsured, meaning that their health insurance plan didn’t provide them with affordable access to health care.
Lost income during maternity leave
Only 19% of Americans receive paid family leave from their employer, meaning that the majority of employees lose income during the crucial period of childbirth and postpartum recovery. A survey conducted by Breeze found that 74% of women would exhaust their savings if they took eight weeks of unpaid maternity leave, 54% would consider taking out a loan to cover costs, and 49% would think about taking money from their retirement account to get by.
Even with paid maternity leave options, the duration may be limited, and individuals may worry about covering additional time off without pay.
Childcare costs
Not all expectant parents have family members who can help with childcare after the baby's birth. Many families rely on dual incomes, and so the decision for one parent to take time off work to care for their child can lead to financial challenges and career setbacks. However, the ever-increasing cost of childcare means that even in multi-person households, the average household is spending 24% of their income on childcare. According to national averages, the weekly childcare costs in 2024 for one child are as follows:
- Nanny: $766, up 4% from 2022
- Daycare: $321, up 13% from 2022
- Family care center: $230, up 0.4% from 2022
- Babysitter: $192, up 7% from 2022
Unforeseen medical complications
Potential complications during pregnancy or childbirth can lead to additional medical bills that may not be fully covered by health insurance companies. In the case of unexpected health emergencies, individuals may worry about the financial implications of medical interventions and hospital stays.
One study identified cost drivers including multiple births, complicated cesarean sections, high-risk pregnancies, preterm birth, low birth weight, complications due to conditions such as hypertension, diabetes, anaemia, and cancer, and in vitro fertilization. It also found that the mean cost of pregnancy-related complications that led to preterm birth was as high as $326,953 for an infant born at 25 weeks. Other research found that multiple births, hypertension, and diabetes were among the pregnancy complications that led to the highest costs of care.
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