Individuals seeking maternity coverage in the non-group insurance market are discovering fewer options are available as insurers seek to cut costs to meet the regulatory demands of President Obama’s health care law.
Blue Cross Blue Shield of South Carolina dropped the coverage to save costs and keep premiums competitive, and insurers in other states have followed suit.
Maternity coverage can be a costly aspect of health insurance because the vast majority of people who purchase it in the individual market plan to have children. Several insurers require customers to pay an additional premium and purchase a plan a year before a child is conceived, and prenatal testing is typically covered only after a deductible is reached.
Few Insurers Offer Coverage
An investigation by the House Energy and Commerce Committee conducted at the behest of Rep. Henry Waxman (D-CA) and Rep. Bart Stupak (D-MI) in October found few major insurers offered maternity care coverage.
Some states already mandate maternity care coverage. A report prepared by the Kaiser Family Foundation found that in 2010, twelve states required maternity coverage in the individual market, and seventeen required it in the small-group market. Under Obama’s law these requirements will expand dramatically in 2014, when all policies will be required to cover maternity expenses as an essential health benefit.
Higher Costs Predicted
Grace-Marie Turner, president of the Galen Institute, a Virginia think tank, says Obama’s solution will drive costs higher for everyone, even those not expecting to need maternity coverage.
“This is further evidence that we need a system for health insurance that allows people to have portable health insurance that they can own and keep with them as their life situations change,” said Turner. “It doesn’t work economically for insurance companies to sell policies to people just before they have thousands of dollars in medical claims, especially when people may drop the policies after that, as is happening now in Massachusetts.”
Turner suggests this indicates one reason why further reform is necessary.
“We need a system for real insurance where many people are paying premiums over a longer period of time to pay the expenses of fewer policyholders who may have large medical claims,” Turner said.
Maternity Coverage and HSAs
The costs for a standard childbirth in the United States can be quite high, and a 2007 study conducted by Thomson Reuters for the March of Dimes found costs can be much higher for a cesarean delivery, even one considered uncomplicated.
“Costs for uncomplicated cesarean deliveries were more than 40 percent higher than costs for uncomplicated vaginal deliveries and approached the cost of complicated deliveries,” the report found.
Some critics claim Consumer Driven Health Plans (CDHPs) fail to provide adequately for the costs of pregnancy. A report released in 2007 by the Kaiser Family Foundation and Georgetown University Health Policy Institute claimed people with high deductible plans pay more for childbirth. Based on an estimated cost for an uncomplicated pregnancy and delivery of $9,660, the report claimed a family under a traditional plan would pay $1,455 in out-of-pocket costs, compared to between $3,000 and $7,884 for those with a CDHP.
However, Turner points out this report failed to compare the situations accurately.
“It’s essential that people look at the full cost of their health care and coverage. A family with traditional insurance may pay $12,000 a year for insurance, plus $1,455 in OOP costs. Another with an HSA may pay $5,000 for the insurance with $7,884 in OOP costs,” Turner noted. “The HSA holder still comes out $571 ahead. And since most people don’t have a baby every year, their overall savings over the longer term can be much greater with an HSA than with traditional insurance.”
Is Maternity Coverage Necessary?
Greg Scandlen, a health policy expert at The Heartland Institute, says most insurers don’t offer non-group maternity coverage because of cost—those who purchase the policies are almost guaranteed to use them—and this is a problem no government mandate can solve.
“Maternity coverage is typically optional, as is prescription coverage,” Scandlen said. “So-called ‘complications of pregnancy’ are covered as regular medical services. Usually one can buy a maternity rider, but it isn’t a great deal—it amounts to dollar swapping since the only people to buy it are those planning on having a baby.”
He also suggests costs have grown because of the increased frequency of C-Sections, which have in turn been encouraged by available maternity coverage.
“C-Sections are much more expensive and unnecessary in most cases. People opt for them because they are convenient—a woman can schedule her childbirth to suit her calendar,” Scandlen said. “People who are paying their maternity costs directly are less likely to pay extra for the convenience.”
Scandlen maintains expectant parents should simply ensure any complications are covered under their policy, and be prepared to pay the costs for childbirth.
“I usually recommend that people not buy maternity coverage and just pay out of pocket for the childbirth,” Scandlen said.
Benjamin Domenech ([email protected]) is managing editor of Health Care News.