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TABLE 3.-2 ESTIMATES OF BIRTHS AVERTED BY ORGANIZED V.S. FAMILY PLANNING PROGRAMS, 1966-71

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a. Medical costs

The medical services directly associated with childbirth are those related to maternity and to care of the newborn during the first year; in addition to normal pregnancies and the sick- and well-baby care of normal infants, the services required include the care of complications associated with pregnancy, of fetal loss, and of premature infants and those with congenital abnormalities. Estimates of the proportion of births which are premature and have other complications, and of the current costs of maternity and pediatric care, are derived from the most recent national data reported by the National Center for Health Statistics, the American Hospital Association, the American Medical Association, the American College of Obstetricians and Gynecologists, Blue Cross, and the Commission on Professional and Hospital Activities, complemented by local data obtained in an intensive study of a large metropolitan area in the South." The available data are not ideal for purposes of this analysis for several reasons. They cover different reporting periods and they do not clearly delineate costs to government as distinguished from third party payors and/or the individuals themselves. Despite these limitations, the resulting figures are believed to represent approximately the cost of delivery and infant care in 1970–72.

Since nearly 99 percent of U.S. babies are born in hospitals, the small percentage of deliveries occurring outside of hospitals are ignored in the estimate and the costs are computed based on the average length of stay for mother and child reported by various sources. Two-thirds of births to low-income mothers are assumed to occur in city or county hospitals and the cost factors appropriate to these hospitals are applied. The remaining third are assumed to occur in roluntary hospitals, based on the Department of Health, Education, and Welfare's estimate that Medicaid covered service for about one-third of low-income persons in 1969." For each normal delivery, the estimate includes charges for hospitalization for both mother and infant, services of the attending physician or resident, and anesthesia. Additional charges are estimated for the five percent of births delivered by Caesarean section, for complications of delivery, and for medical care of miscarriage and fetal loss." Pediatric care for normal infants is first

14 For the basic methodology employed. see C. F. Muller and F. S. Jaffe, "Financing Fertility-Related Health Services in the United States, 1972-1978 : A Preliminary Projection," Family Planning Perspectives, January 1972 ; additional national cost information was obtained by Dr. Muller during 1972 as part of a continuing research project supported by the Ford and Rockefeller Foundations Program in Support of Social Science and Legal Research on Population Policy. Comparable local cost information was secured by Dr. Muller during a study conducted in the fall of 1972 on Financing Fertility-Related Services in Jacksonville, Florida, 1973-78 (published by the Center for Family Planning Program Development in 1973). The cost data presented in this paper are revisions of the first estimates, based on later and more complete information secured during 1972 from these sources and on the relationship between medical prices in Jacksonville and in the U.S. The prematurity rate is derived from National Center for Health Statistics, Infant Mortality Rates--Socio-Economic Factors Series 22, No. 14. March 1972. The rates of hospital admissions of infants for acute illness and for abnormalities are derived from special tabulations of the NCHS Hospital Discharge Survey. The rate for Caesarian births is derived from the American College of Obstetricians and Gynecologists, National Study of Maternity Care, 1971.

15 U.S. Bureau of the Census, Statistical Abstract of the United States, 1972, GPO, p. 51.

19 Department of Health, Education and Welfare, Řeport of the Task Force on Medicaid and Related Programs, GPO, 1970, p. 10.

17 Fetal loss is estimated at 17.4 percent of births, based on S. Shapiro et al., "Factors Associated with Early and Late Fetal Loss." Advances in Planned Parenthood, Vol. 6, Excerpta Medica Foundation, Princeton, N.J., 1971, p. 55.

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estimated on the basis of a standard nine well-child visits, plus immunizations, during the infant's first year, and then reduced by half on the assumption that the care of low-income infants does not typically meet this standard. In addition to the care of normal infants, estimates are computed for the proportion of births which are premature (based on the finding that 8.9 percent of births to women with family incomes below $5,000 were premature in 1964–66); for the one percent which have congenital abnormalities, and for the 15 percent of infants who will suffer acute illness during the first year and require hospitalization.”

Each of the component costs, based on recent institutional charges, fees and average length of hospitalization, is set forth in Table 4. The weighted average total cost for maternity and pediatric care of a child born to a low-income woman is estimated at $971.

Not all of these costs are borne by government; some are paid by the individuals themselves or through health insurance. There is only fragmentary information available on the share of these costs which is borne by government. From data published by the Social Security Administration for 1970–71, it is possible to isolate those government expenditures for hospital care which may be applicable to maternity and pediatric care. Of the total of $14.9 billion spent by government for hospital care, $8.2 billion was allocated through programs which do not generally include maternity and pediatric care (such as Medicare, Veterans' Administration, vocational rehabilitation and workmen's compensation). The remaining programs-public assistance vendor payments, general hospital and medical care, and maternal and child health-spent $6.6 billion which constituted the total governmental expenditure which could be applicable to maternity and pediatric care. American Hospital Association statistics show that maternity admissions constitute 11.6 percent of all hospital admissions.

18 The estimate omits the medical costs for institutional and home care of mentally retarded infants. The estimate for abnormalities of 1 percent is a national proportion for births in all socioeconomic groups. A greater proportion of low-income births have congenital abnormalities. Use of the overall national proportion will tend to understate the costs of this component of careand the savings as a result of births averted.

18 Dorothy P. Rice and Barbara S. Cooper, "National Health Expenditures, 1929–71," Social Security Bulletin, January, 1972, Table 3, p. 9.

TABLE 4.-ESTIMATED MEDICAL COSTS OF MATERNITY CARE FOR LOW-INCOME WOMEN AND

PEDIATRIC CARE DURING INFANT'S IST YEAR, 1970-71

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Grand total per birth....
Weighted average total cost per birth, 2/3 in public

hospitals, 1/3 in voluntary hospitals.

889.07

1, 134. 13

970. 76

Applying this proportion to the total of $6.6 billion yields a gross approximation of $759 million as the amount which federal, state and local government could have expended for maternity services in 1970–71. Women in families with incomes below twice the poverty level (who include most, if not all, potential recipients of subsidized care) had about 1,735,000 births a year during this period with a weighted average hospital cost of about $702 per birth; the total expended was thus approximately $1,217.4 million. Crudely estimated, the government's share is about 62 percent (Table 5).

The data available with which to estimate the government share of the costs of physicians' services for maternity and pediatric care are even less satisfactory. Of the total of $14.2 billion expended in the U.S. on all physicians' services in 1970–71, $3.5 billion, or 25 percent, was expended by government. The weighted average cost per birth of physicians' services for maternity and pediatric care shown in Table 4 is $268; if the government share of these costs follows the overall national pattern, one-fourth, or $67 per birth, would be public expenditure.

A conservative estimate of the average government expenditure for medical care associated with a low-income birth, then, would consist of 62 percent of the average hospital cost per birth--$437—plus one-quarter of the average physicians' cost-$67. The total estimated governmental expenditure of $504 constitutes about half of the total average cost of $971. TABLE 5.-APPROXIMATION OF GOVERNMENTAL SHARE OF HOSPITAL MATERNITY AND PEDIATRIC COSTS, 1970-71

Item

Cost (millions)

Percent

$14,756.8

8, 212.9

1. Total public expenditures for hospital care ..

(a) Less: Programs not applicable to maternity care and pediatric care (e.g.,

medicare, workmen's compensation, VA vocational rehabilitation, etc.)...
(b) Remainder: Programs applicable to maternity and pediatric care (public as-

sistance vendor payments, general hospital and medical care, maternal and

child health).. 2. Maternity admissions as percent of all hospital admissions : 3. Estimated cost to Government of maternity admissions (1(b) X 2). 4. Estimated total cost of hospital maternity and pediatric care for low-income births

(weighted average cost of $701.66 per birth from table 4 for 1,735,000 births to

women of low or marginal income).. 5. Governmental share of total hospital cost (3+4)..

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1 Derived from Dorothy P. Rice and Barbara S. Cooper, "National Health Expenditures, 1929-71," Social Security Bulletin, January 1972, table 3, p. 9. i From American Hospital Association, "Hospital Statistics 1971," 1972.

TABLE 6.- ESTIMATED ANNUAL PUBLIC ASSISTANCE COSTS PER AFDC RECIPIENT Item:

Cost Average annual payment per AFDC recipient'.

$625.92 Average expenditure for social services per recipient?

18. 65 Average administrative cost per recipient :

63. Total per recipient.

707.57 Average cost of food stamps per recipient

91. 20 Total average annual cost per recipient..

798.77 I DHEW Publication 73-03100, "Public Assistance Statistics," June 1972, table 7. 2 Derived from Senate Committee on Finance, Committee Print on H.R. 16311," 91st Cong.. 2d sess., June 1970, p. 107.

3 Derived from Subcommittee on Departments of Labor, Health, Education, and Welfare and Related Agencies, House Committee on Appropriations, "Hearings, pt. 5,92d Cong., 2d sess., Mar. 28, 1972, p. 315.

* Derived from Department of Agriculture, "Food Stamp Program Statistical Summary of Operations, September 1972,'' Oct. 27, 1972. p. 1. b. Public assistance costs

The estimated average national cost of cash assistance, social services, food stamps and administrative costs per public assistance recipient is $798.77 per year (Table 6). Of all patients enrolled in organized family planning programs in 1971, 16 percent were recipients of public assistance.” It seems reasonable to assume, therefore, that at least 16 percent of the unwanted births averted by organized family planning programs would have been to recipients of public assistance. This undoubtedly underestimates the total public assistance cost associated with births averted through the program since it ignores those births which would have resulted in their families becoming assistance recipients and the additional costs for both mother and child in these families.

20 Ibid., Table 2, p. 7. 21 Jaffe, Dryfoos and Corey, op. cit.

If at least 16 percent of the unwanted births averted would have been public assistance recipients, the minimum costs of public assistance per 100 births averted would have been $12,780 per year (16 x $798.77), or an average of $127.80 per year per birth averted. c. Opportunity costs

In addition to the costs of medical care and public assistance, there are shortterm costs from unwanted births associated with the mother's loss of earnings as a result of the pregnancy. Data on the age composition of patients served by family planning programs permit these opportunity costs to be estimated, based on Current Population Survey findings on the labor force participation rates of women in different age groupings and their earnings. The calculation is presented in Table 7 which shows that nearly half of the patients of organized family planning programs are likely to be employed. Since 90 percent of patients have low or marginal incomes, it is assumed that they work in the lower paying jobsclerical, sales, private household service and other service--and the calculation utilizes the applicable mean earnings and rates of full-time and part-time employment for each job classification. Based on these assumptions, it appears that each birth represents an opportunity cost in the year of the pregnancy alone of about $1,044 in lost earnings. TABLE 1.-ESTIMATE OF OPPORTUNITY COSTS TO WOMEN PER 100,000 BIRTHS AVERTED BY ORGANIZED FAMILY

PLANNING PROGRAMS, 1971
1. ESTIMATE OF PROPORTION OF PATIENTS EMPLOYED

Number of

patients in family planning

Proportion employed ? (percent)

Estimated number of

patients employed

Age

programs 1

19 or less 20 to 24. 25 to 34 35 to 44.

27,000

38.000
27, 100
7,900

39.3
56. 1
45.8
51.5

10,611 21, 318 12, 411 4,069

Total

100,000

48, 409

2. ESTIMATE OF EARNINGS (ASSUMING EMPLOYED PATIENTS ARE DISTRIBUTED EQUALLY BETWEEN CLERICAL SALES, PRIVATE HOUSEHOLD SERVICE AND OTHER SERVICE JOBS)

Earnings in thousands)

Full-time workers ?

Less than full-time

workers a

Number of

patients

Type of job

Total earnings

Number

Earnings

Number

Earnings

Clerical.
Sales..
Private household service.
Other service..

12, 102
12, 102
12, 102
12, 102

8,096
6, 208
5,228
6,099

$41, 605
31, 903

7,633
21, 493

4,006
5,894
6, 874
6,003

$9, 226
13, 574
3, 822
9,977

$50, 831
45, 477
11, 455
31, 470

Total.

48, 408

25, 631

102,634

ווו ,22

36, 599

139, 233

3. ASSUMING Y2 WOULD LOSE EARNINGS FULL YEAR AND % FOR 6 MONTHS Full year loss = $139,233,000+2..

$69,616, 500 Hall year loss = $69,616,500+2.

34,808, 250 Total earnings loss per 100,000 births..

104, 424, 750 Total earnings loss per birth.

1,044 1 Based on age composition reported in National Center for Health Statistics, DHEW, National Family Planning Reporting System 1971.

Data on labor force participation rates for women by age and proportions employed in selected job categories full-time as well as mean earnings in these categories, derived from Bureau of the Census, "Current Population Survey", March 1971, unpublished data.

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