Preemies can cost 15 times as much to care for as full-term babies — in their first year alone — making some of them Million-Dollar Babies:
Preemies are a quickly expanding class of patients in the U.S., Britain, and other advanced nations. And the costs and technical challenges of caring for them are a growing source of controversy. Nearly 13% of all babies in the U.S. are preemies, a 20% increase since 1990. A 2006 report by the National Academy of Sciences found that the 550,000 preemies born each year in the U.S. run up about $26 billion in annual costs, mostly related to care in NICUs. That represents about half of all the money hospitals spend on newborns. But the number, large as it is, may understate the bill. Norman J. Waitzman, a professor of economics at the University of Utah who worked on the National Academy report, says the study considered just the first five years of the preemies’ lives. Factor in the cost of treating all of the possible lifelong disabilities and the years of lost productivity for the caregivers, and the real tab may top $50 billion, Waitzman says.In the U.S., corporations handle most of the financial burden. Employers generally cover some or all of the hospital charges in their health plans, and they also must deal with lost work hours of staff who spend weeks, sometimes months, attending to their premature infants. Corporations pay out nearly 15 times as much for babies born prematurely in their first year of life as for full-term babies, at an average cost of about $41,000 per child. For the earliest of the preemies, who are born in fewer than 28 weeks and spend up to three months in the hospital, the tab is higher. Says Waitzman: “The million-dollar babies are there.”
Ryan was not a million-dollar baby, but he wasn’t far from it. The cost for his first two months in the hospital exceeded $400,000, not including certain surgeries and procedures. Because Eric is a technology security expert at the U.S. Energy Dept. and Andrea is an intelligence analyst for a government contractor, the family had good health insurance through the Blue Cross Blue Shield Federal Employee Program. They could also navigate the government bureaucracy and get Ryan qualified for Medicaid, which covered the bills that Blue Cross didn’t. To help pay for a nurse, they applied for another state program in Maryland. “We used to play a game: How many bills would we get?” says Eric. “We got up to 12 per day.”
The trend points to more and more “heroic” rescues:
Technological breakthroughs are allowing physicians to save babies at younger and younger ages. Births at 28 weeks are now routine, and the outer edge of viability is 22 weeks. In the next three to five years, doctors could push the threshold to as low as 20 weeks, at which age the infants would weigh about 1 pound, measure 10 inches long, and require even more costly and complicated treatments.
No one wants to admit the enormous opportunity cost of keeping a preemie alive. Not only does preemie care cost a lot, but premature babies often have lingering medical problems and disabilities — and keeping a disabled child typically means having fewer other, healthy children.
Of course, the real reason for all these heroic measures is that they’re making some folks a lot of money:
For hospitals struggling with cost overruns in other areas, NICUs can be havens of healthy revenue growth and profits. Children’s National sets the goal of 4% profit margins overall, but NICU profits can be double that. Last November the hospital unveiled a $75 million tower that features various specialty units to treat heart and brain problems of preemies. Its expansion plans include a second NICU that will open in 2009. It will have 54 beds, boosting Children’s total preemie capacity by 25%. All of the rooms will be private and will be equipped with Internet systems that allow neurologists to monitor brain function from their homes.