Association for Public Policy Analysis & Management

In this paper we test whether non-monetary costs are meaningful obstacles to health care using state-level policies that reduced these costs for new mothers. We study a Medicaid policy that makes long-acting reversible contraceptives (LARCs, which include IUDs and implants) available immediately following delivery. Traditionally, Medicaid paid physicians and hospitals a single, bundled fee for all services related to delivery; if the new mother desired a LARC while still at the hospital, the hospital or physician would have to cover the cost of the device, which can be upwards of $800. The new policy allows physicians and hospitals to insert the LARC immediately following delivery and bill the service separately from the global fee, receiving the same reimbursement as if the LARC were inserted during a follow-up outpatient visit. For the patient, the policy allows the mother to have a LARC implanted while she is still at the hospital, decreasing the wait-time and travel cost usually associated with getting a LARC.

This change in Medicaid reimbursement was first adopted by South Carolina in 2012 and has since been implemented by 38 other states. States that have adopted this policy, as well as advocacy groups, stress that providing access to immediate postpartum LARC reduces unintended pregnancies, especially short-interval pregnancies (less than 1 year after delivery), the majority of which are unintended. A decrease in short-interval pregnancies may result in better birth outcomes as short-interval pregnancy is associated with preterm delivery and adverse neonatal outcomes.

In this paper, we test the hypothesis that additional Medicaid reimbursement for immediate postpartum LARCs increases LARC use, decreases birth rates, and improves neonatal outcomes. We use birth data from the National Vital Statistics System and data on LARC use provided by state Medicaid agencies to estimate the effects on LARC use, total births, preterm deliveries, and low-birthweight babies. To identify the causal effect, we estimate difference-in-differences regressions and event studies. Our identifying assumption is that states exhibit common trends in the outcome prior to the policy and there are no contemporaneous shocks with differential effects. Event studies provide visual evidence in support of the common trends assumption. Falsification tests using women who have not previously given birth and were not affected by the policy help test for contemporaneous shocks.

Preliminary event studies provide evidence that access to inpatient LARCs may decrease adverse birth outcomes. Nine months after the policy goes into effect, we see a 4% decrease in the total number of low-birthweight babies, with a 6% decrease among unmarried mothers and a 10% decrease among teen mothers. Additionally, we see a decrease in premature births of 3% among all mothers, with a 5% decrease among unmarried mothers and a 2% decrease among teenage mothers. We do not observe a decrease in the total number of births, though this may be due to the fact that we cannot distinguish Medicaid births from non-Medicaid. In the future, we plan to use additional sources of Medicaid-specific birth data to more precisely estimate the effect on births.