Understanding and controlling the cost of pregnancy and maternity in your workplace

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.

Overlooked out-of-pocket costs during pregnancy and maternity

Research suggests that some low-income families spend nearly 20% of their annual income on medical care and health services during the year of pregnancy and birthing. However, when considering the overall costs of pregnancy and maternity that employees face, employers must also be aware of the other out-of-pocket costs associated with pregnancy, giving birth, and the postpartum period.

Prenatal vitamins and supplements

The U.S. prenatal vitamins supplements market was expected to reach of valuation of $189.3 million in 2023. The cost of prenatal multivitamins hovering around $68 for a month’s supply, which adds up when taken over the duration of a pregnancy. While some prenatal vitamins may be covered by insurance, over-the-counter medications, supplements, or specific brands preferred by prospective parents may not be.

Maternity clothing

As the pregnancy progresses, individuals may need to invest in maternity-specific clothing that is comfortable and accommodates their changing body shape. Research by maternity brand Isabella Oliver found that expectant mothers purchase, on average, 21 items of maternity clothing, at a cost of approximately $891.

Childbirth classes

Some individuals opt for childbirth classes to better prepare for labor and delivery. These classes may come with fees that are not covered by insurance. The cost of childbirth classes depends on geographical location and the type of class it is, but they can range from $45 to $175 per class or more.

Postpartum recovery items

Postpartum healthcare spending includes the cost of recovery aids such as support belts, nursing pillows, relief sprays, cooling pads, and sanitary products. The products purchased will vary according to the unique circumstances of each individual. However, if looking at just the essential postpartum supplies listed on The Bump, the cost would amount to $150.

Postpartum support services

Postpartum care for parents and new babies is a contributor to the overall out-of-pocket costs employees may face. Postpartum support services include mental health support, lactation specialists, and sleep consultants. They are pivotal services, given that 22% of new parents struggle with a lack of confidence in their abilities, one in five parents face postpartum depression, and three in five parents do not breastfeed for as long as they intend to.

Insights such as these suggest that if parents had more affordable access to postpartum support services, not only could this reduce their financial strain but also improve their wellbeing.

Baby essentials

Even if your employee’s health insurance covers prenatal visits, everything associated with a hospital birth including medication and complications, and postpartum care, becoming a parent involves costs that go far beyond this. First-time parents typically will need to expense:

• Nursery furniture and décor
• Childproofing equipment
• A stroller and car seat
• Clothing
• Toys
• Breast or bottle-feeding equipment

Then there’s the ongoing cost of diapers, wipes, formula, hygiene, and health essentials too. Babycenter cites the following average monthly costs:

• Formula: $400 to $800
• Diapers: $70 to $80
• Clothing: $20 to $50
• Baby food: $98 to $230
• Toys and books: $30 to $50

The factors driving high maternity costs in your business

As healthcare spending rises, it's crucial to understand where costs are going up for your employees, as well as your business. Many self- and fully-insured companies report maternity and childbirth as one of the top spending categories among their employees. What factors are driving high maternity costs?

Fertility treatments

Fertility treatments are quickly becoming a crucial part of reproductive healthcare for the one in 12 couples affected by infertility each year, as well as members of the LGBTQIA+ community and single parents by choice. However, they're notoriously expensive and shrouded in anxiety and misinformation. Some employees also are sent to fertility treatments too early, losing the opportunity to address lifestyle factors that may affect their fertility.

For those that seek treatment, a single cycle of IVF can cost up to $30,000, and KFF finds that the average out-of-pocket costs for fertility treatments are above $10,000. For employers who cover fertility expenses, high costs of treatment drive up their costs as well, especially since many people require multiple rounds of treatment.

Preterm births

In the U.S., one in ten babies are born early, with preterm birth rates higher among Black birthing parents. In addition to the emotional and physical trauma faced by the family, preterm babies are some of the most expensive patients in all of pediatrics. Studies show that preterm babies accounted for $26.2 billion in healthcare expenditures, or over $51,000 per infant.

C-sections

Since 1990, the rate of C-section use has tripled, outnumbering vaginal deliveries in several regions around the world and exceeding the rate scientists consider optimal. As a surgical procedure, C-sections are inherently risky and can lead to a variety of complications for both the birthing parent and the baby. Because of this, lowering C-sections is quickly becoming a top priority for healthcare organizations. On average, C-sections cost over $5,000 more than vaginal births, notwithstanding the cost of additional complications.

Lack of preconception/prenatal care

Preconception and prenatal care can have a huge impact on outcomes and costs, ensuring a birthing person is well-positioned to have a healthy and successful pregnancy. However, access to adequate care is inequitable: over 50% of U.S. counties lack a single OB-GYN, and restricted or limited access to contraception services disproportionately affects members of historically marginalized communities. A lack of access to preconception and pregnancy care increases the risk of pregnancy loss and other dangerous complications.

Read more: Redefining prenatal care: An interview with Dr. Alex Peahl, Maven's Visiting Scientist

Poor mental health

Maternal mental health can have a huge impact on out-of-pocket costs before, during, and after childbirth. Perinatal mood disorders (PMD) like postpartum depression and anxiety affect one in eight women around the world, and untreated mood disorders cost the U.S. economy over $14 billion annually. Likewise, birthing people with PMDs have 90% higher healthcare costs than those who don't.

Controlling maternity costs in the workplace

HR leaders have an essential role to play in controlling and mitigating pregnancy costs through proactive benefits and policies that help employees access critical care throughout their family-building journey. The best way to help lower long-term maternity costs is to improve the quality and delivery of care to your employees.

One-size-fits-one care

Healthcare organizations often struggle to adapt care to meet people where they are. Personalized care, which takes a holistic approach to each individual based on their clinical, emotional, and financial needs, can help all people find the right support—and right providers—for their unique circumstances. You can deliver personalized care to your employees by offering maternity benefits through a vendor like Maven who can tailor the member experience through 24/7 access to specialists, culturally-competent care and expert-backed, personalized content.

Early engagement

One of the biggest gaps in maternity care today is a lack of access, fueled by systemic racism and discrimination. Because of this, many people, and especially low-income communities, are not able to seek or receive treatment for chronic or underlying conditions before they start building families. Early engagement programs can ensure your employees connect with their providers early and often, whether they're making plans, pursuing conception, or raising their families.

Virtual access to specialists

Long wait times impact the healthcare system across the board. But parents, whether expecting or raising their kids, often need assistance from a specialty provider in a matter of hours, not weeks or months. Providers like doulas, nutritionists, fertility educators, and more are often only available in certain geographic areas, and only covered by certain employee health plans.

Offering virtual, on-demand access to care can help break down those barriers, empowering your employees to speak to specialists when they need it, avoiding long wait times and limited access.

Maven helps drive ROI with unmatched care

Maven is the world’s largest virtual clinic for women and families on a mission to make healthcare work for all of us. From preconception and family building to pregnancy, postpartum, return to work, parenting, menopause and beyond, Maven’s intuitive platform removes barriers to accessing holistic support, while improving health outcomes and return-to-work rates and reducing costs for employers. 

To learn more about how Maven can support your employees, contact us today.