Objective. Very low birth weight (VLBW)infants (those with birth weights <1500 g) account for only 1.2% of births but 46% of infant deaths. Large improvements in neonatal technology in the last 2 decades have significantly improved survival prospects for infants with low birth weights, but at a high cost. Due largely to a lack of data, the costs of medical care during the period in which infant mortality is measured (the first year of life), as well as the cost-effectiveness of that care for VLBW infants, have not been quantified. Despite this fact, public policies both toward providing insurance coverage for their care, as well as denying payment for their treatment, have either been proposed or implemented on cost-effectiveness grounds.
Patients. The study includes all VLBW single live births in the state of California during 1986 and 1987 that were continuously eligible (through traditional channels) for the state's Medicaid program.
Main Outcome Measures. Treatment costs were measured for all medical care received during the first year of life, including all inpatient and outpatient care received. The cost-effectiveness of care is measured by aggregate treatment costs for all singleton VLBW liveborns divided by the number of first-year survivors.
Results. Average treatment costs per first-year survivor for infants <1500 g was $93 800 (in 1987 constant dollars). Treatment costs per survivor were twice as high for infants <750 g ($273 900) as for the next highest birth weight group 750 to 999 g ($138 800) which was itself almost twice as high as for the 1000 to 1249 g group ($75 100). The gradient in cost-effectiveness with birth weight then drops off to $58 000 per survivor for infants with birth weights between 1250 and 1499 g.
Conclusion. Public policies aimed at improving birth outcomes by providing insurance coverage for pregnant women and children, such as the recent Medicaid expansions, can potentially be very cost-effective. Although maternal interventions such as prenatal care are relatively inexpensive, each normal birth that results instead in a VLBW birth saves $59 700 in first year medical expenses. However, cost savings attributable to increased birth weights depend on where in the birth weight distribution the increase occurs as well as the size of the birth weight increase. For infants with birth weights >750 g, significant gains can accrue from even a small shift in the birth weight distribution. A shift of 250 g at birth saves an average of $12 000 to $16 000 in first year medical costs and a shift of 500 g generates $28 000 in savings. However, there is a threshold effect on birth weight. For infants <750 g, increases in birth weight may increase medical expenditures. For instance, a shift in birth weight to the 750 to 999 g range increases costs by $29 000.