What a difference a day makes, especially for expectant mothers this time of year. For mothers-to-be with babies due about now, inducing labor before the stroke of midnight New Year's Eve can be a money saver, especially for those with high insurance deductibles that reset Jan. 1.
Pregnant women with high health insurance deductibles who've already met their out-of-pocket requirements while pregnant can face paying them again unless they produce their newborns a touch early. Simple vaginal deliveries cost about $15,000, or higher if complications arise. Those with high annual deductibles — the amount a patient must spend before insurance kicks in — could be hit with an unexpected bill for $2,000 to $7,000 and more for an early January birth.
Inducing labor to save patients money is not something doctors are willing to talk openly about — the Observer reached out to local OB-GYNs with no luck — but savvy moms have been talking about it in online forums for years.
“I’m concerned about having a January baby and ending up with doubled bills because of the pregnancy spanning two calendar years,” wrote one mother. “My deductible and max out-of-pocket are high, so if I end up paying in both years, it will cost me as much as having no insurance at all!”
“Has anybody been in this situation before?” asked another. “What the heck do I do? I’d rather not be induced if I can help it, but I’d also like to avoid thousands of dollars in medical bills if at all possible. Are doctors willing to work with you in that regard? Am I horrible person for thinking about asking for an induction because of financial reasons? I mean, it’s four days. Four! I know I might not even make it to my due date, but good Lord is this stressing me out right now.”
Bart McCollum, the president of Ameriflex, one of the nation’s largest independent health benefits administrators, says he first heard about this phenomenon when one of his contractors mentioned it. She was pregnant and her due date was early January. She had already hit her out-of-pocket maximum on her insurance for the year and decided to ask her doctor to induce her labor before her insurance reset.
At the hospital waiting to deliver her baby, she noticed that the hospital was full of expectant moms doing the same thing.
“It’s a really interesting phenomenon,” McCollum says. “We’ve done a little research on it, but there’s not a lot of data out there.”
McCollum says that aside from mothers saving money by avoiding paying another deductible, there is also a tax incentive because of the child tax credit they can claim sooner if the child is born before 11:59 p.m. Dec. 31.
The tax credit prompting mothers with January due dates to induce labor early isn’t a rare occurrence, according to a 1999 University of Chicago study called Taxes and the Timing of Births, published in the Journal of Political Economy. The study found that the probability of having a child in the last week of December rises by 26.9 percent because of the tax incentive.
“The doctor was trying to get him out so he could be the first baby of 1990," one mother told researchers, "but my husband was more concerned about getting him out in 1989 to use as a tax write-off.”
Many of the hospital staff members interviewed confirmed the researchers' hypothesis about more mothers seeking to deliver before the new year. The study quoted another mother who claimed her “doctor encouraged her to schedule her late-December birth far in advance to avoid the rush of mothers hoping to have their babies before the end of the year.”
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But it’s not just expectant mothers who benefit from inducing labor early. Medical care providers also gain, McCollum says, because it's easier to get insurance companies to pay a claim than to demand payment from new parents. It’s also a slightly higher cost to induce because it’s a more complicated procedure.
For medical providers, McCollum says, the choice boils down to whether they want to do a slightly more expensive delivery to be paid by an insurance company versus waiting a few hours and having to collect a large amount of money from a person who may take a long time to pay.
McCollum says insurance companies aren’t fans of paying for a more expensive birth. He believes they may have measures in place to track the practice and could refuse to pay.
“Nobody is saying people are cheating on this,” he says, “but you could see more incentive to have babies on Dec. 31 rather than on Jan. 1.”