Financing Maternity and Early Childhood Healthcare in The Australian Healthcare System: Costs to Funders in Private and Public Hospitals Over the First 1000 Days

Background: Maternity care is a significant contributor to overall healthcare expenditure, and private care is seen as a mechanism to reduce the cost to public funders. However, public funders may still contribute to part of the cost of private care. The paper aims to quantify (1) the cost to different funders of maternal and early childhood healthcare over the first 1000 days for both women giving birth in private and public hospitals; (2) any variation in cost to different funders by birth type; and (3) the cost of excess caesarean sections in public and private hospitals in Australia. Methods: This study utilised a whole of population linked administrative dataset, and classified costs by the funding source. The mean cost to different funders for private hospital births, and public hospital births in the Australian state, Queensland are presented by time period and by birth type. The World Health Organization’s (WHO’s) C-model was used to identify the optimal caesarean section rate based upon demographic and clinical factors, and counterfactual analysis was utilised to identify the cost to different funders if caesarean section had been utilised at this rate across Australia. Results: We found that for women who gave birth in a public hospital as a public patient, the mean cost was $22474. For women who gave birth in a private hospital the mean cost was $24731, and the largest contributor was private health insurers ($11550), followed by Medicare ($7261) and individuals ($3312). Private hospital births cost government funders $10050 on average; whereas public hospital public patient births cost government funders $21723 on average and public hospital private patient births cost government funders $20899 on average. If caesarean section deliveries were reduced, public hospital funders could save $974 million and private health insurers could save $216 million. Conclusion: Private hospital births cost government funders less than public hospital births, but government funders still pay for around 40% of the cost of private hospital births. Caesarean sections, which are more frequently performed in private hospitals, are costly to all funders and reducing them could impart significant cost savings to all funders.