Original research article
Cost–benefit analysis of state- and hospital-funded postpartum intrauterine
contraception at a university hospital for recent immigrants to the
Maria Isabel Rodrigueza,⁎, Aaron B. Caugheya, Alison Edelmanc,
Philip D. Darneya,b, Diana Greene Fosterb
aCenter for Clinical and Policy Perinatal Research, Department of Obstetrics, Gynecology, and Reproductive Sciences, University of California,
San Francisco, San Francisco, CA 94110, USA
bBixby Center for Global Reproductive Health, University of California, San Francisco, San Francisco, CA 94110, USA
cDepartment of Obstetrics AND Gynecology, Oregon Health and Science University, Portland, OR 97239, USA
Received 27 August 2009; revised 27 October 2009; accepted 5 November 2009
Objective: To examine the hospital and state costs of offering the option of a postpartum intrauterine device (IUD) to an underinsured
population of recent immigrants to the United States with Emergency Medicaid (EM) insurance coverage only.
Study Design: This study is a retrospective cohort study comparing the costs of offering a reversible long-acting method of contraception
(IUD) postpartum to women with EM and the current policy of covering the obstetrical delivery only. A cost–benefit analysis from the
perspective of both the hospital and the state was conducted. A database of EM obstetrical patients from 2002 to 2006 was created from
hospital billing records to calculate mean pregnancy costs and revenue, as well as the probability of repeat pregnancy and pregnancy
outcome. Probability of IUD uptake and continuation was obtained from hospital records and the literature.
Results: A postpartum IUD program is not cost beneficial from the hospital's perspective, losing 70 cents per dollar spent on the program.
However, the state government would save $2.94 for every dollar spent on a state-financed IUD program.
Conclusion: Considering only the direct costs associated with a repeat pregnancy, a program offering the option of postpartum IUD
placement to underinsured women would significantly reduce state expenditures on subsequent pregnancies.
© 2010 Elsevier Inc. All rights reserved.
Keywords: Cost–benefit analysis; Postpartum intrauterine contraception; Immigrants; Emergency Medicaid
Unintended pregnancy has substantial costs for women,
families and communities. Unintended pregnancy occurs
disproportionately to poor women with limited resources and
access to health care [1,2]. Medicaid is the largest source of
public dollars for family planning services in the United
States (US), and cost–benefit analyses have repeatedly
shown public savings from investment into contraceptive
services for low-income women [2–4]. However, Medicaid
legislation leaves vulnerable populations at risk of unintend-
ed pregnancy due to restrictions of access to Medicaid and to
family planning services [5–7]. One such group is immigrant
families that have been in the US for fewer than 5 years.
Federal welfare reform in 1996 and 2005 dramatically
restructured Medicaid eligibility for the immigrant popula-
tion . All applicants must meet the same criteria for
financial need as applicants for Standard Medicaid (SM), but
benefits are limited based on length of citizenship. Under the
Personal Work and Responsibility Welfare Act of 1996,
undocumented and legal immigrants who have been in the
US for less than 5 years are eligible for Emergency Medicaid
(EM) coverage only . With respect to reproductive health
care, EM covers the cost of a delivery, but provides no
federal funds for prenatal care or contraception.
This federal legislation contrasts with other federal laws
such as the Emergency Medical Treatment and Labor Act
Contraception 81 (2010) 304–308
☆Financial disclosure: This study was funded by an anonymous donor.
⁎Corresponding author. San Francisco General Hospital, San Fran-
cisco, CA 94110, USA. Tel.: +1 415 206 8358; fax: +1 415 206 3112.
E-mail address: email@example.com (M.I. Rodriguez).
0010-7824/$ – see front matter © 2010 Elsevier Inc. All rights reserved.
(EMTALA). EMTALA requires that hospitals provide care
for all patients who seek it, but does not provide adequate
reimbursement for doing so. It is an unfunded mandate .
These policies create an undue financial hardship for
hospitals and safety net clinics that provide a high proportion
of indigent care [4,10,11].
Federal guidelines define ‘emergent care’ to include
admission for a delivery and exclude all prenatal and
postpartum care, including contraception . By covering
acute care only, these policies shift health care to the more
expensive hospital setting, which is where the majority of
those individuals without health insurance receive their care
[4,7]. Lack of health insurance is associated with multiple
obstetrical and neonatal outcomes that are detrimental to the
health of the woman and child, and expensive for the
hospital, society and the state . Providing only acute
hospital care for recent immigrants, undocumented or not,
results in increased costs for the individual and for taxpayers
[6,7,9,13]. Previous research has established that restriction
of access to postpartum sterilization for this population to
only at time of cesarean delivery results in increased hospital
The intrauterine contraceptive device (IUD) is well
established as highly effective and cost-effective for
contraception [1,14–16]. Despite high expulsion and
discontinuation rates, postpartum IUD placement is a
safe and efficient manner of providing contraception for
women who do not routinely access the health care
system . Women with EM who do not desire
sterilization may be interested in a reversible form of
long-term contraception. Given this background, we
conducted a cost–benefit analysis of a postpartum IUD
program from the fiscal perspective of the hospital and
We conducted a retrospective cohort study examining
costs and outcomes of women receiving EM at a university
hospital. We utilized these data to examine the costs of
offering a long-acting method of contraception postpartum to
women with EM and the cost of the hospital's current policy
of covering only the obstetrical delivery. We created two
models: hospital provision of IUDs postpartum and state
funding of IUDs postpartum. In a cost–benefit analysis, all
inputs (costs) and outcomes (benefits) are converted into
dollar values and a benefit–cost ratio of benefits (costs of
pregnancies averted) over costs (of IUD program) is created.
The benefit–cost ratio of the costs of subsequent health care
to IUD program costs was the primary outcome measure for
The institutional review boards at Oregon Health &
Science University (OHSU) and the University of Cali-
fornia, San Francisco have reviewed and approved the
2.1. Study database
The study database includes women with EM who
delivered at OHSU between July 2001 and December
2006. Records were identified based on insurance type and
sorted by Diagnosis-Related Group (DRG) codes for
pregnancy outcome type (Table 1). These are the only
obstetrical diagnoses for which services are covered for EM
patients at the hospital.
A cohort was identified of all women with EM who
delivered at OHSU in 2002. These women were then
followed through 4 years of hospital data to identify repeat
obstetrical and gynecologic admissions at OHSU. Annual
pregnancy rates, pregnancy outcomes, pregnancy costs and
net revenue by procedure type were determined for this
cohort (Table 2).
2.2. Pregnancies averted
The number of pregnancies that would be averted by
offering a postpartum IUD to EM patients is the difference
between the expected pregnancies in the absence of the
program and the pregnancies expected among women
accepting an IUD through the program. Annual rates of
pregnancy in the absence of the program were calculated
from hospital records.
To estimate pregnancies averted, we considered both
contraceptive failures among women using the IUD as well
as pregnancies experienced by women who chose to
discontinue or expelled the IUD [17–19]. Continuation
rates of the IUD are taken from the literature . We
assumed IUD placement would occur immediately after
delivery and accounted for this higher expulsion rate than is
found among non-postpartum women in our model .
For our baseline expulsion rates, we used the results from
the largest trial conducted by the World Health Organization
. We adjusted the expulsion rate to account for the
lower expulsion rate seen with IUDs placed at time of
cesarean delivery . Discontinuation rates encompass
method-related reasons as well as the desire to achieve
pregnancy. For the sensitivity analysis, we modeled
Estimated state and hospital costs for Emergency Medicaid pregnancy-
aCalculated from hospital revenue.
bCosts calculated by charges and institutional cost-to-charge ratio.
305M.I. Rodriguez et al. / Contraception 81 (2010) 304–308
discontinuation rates in a range from half to twice the
baseline estimates to examine how variations in this rate
would affect cost outcomes.
Our baseline expulsion rate of 9.75% for the first year is
the expected average for postpartum placement [17,22].
After the first year, expulsion rates approximate those of
interval IUD placement . Sensitivity analyses assess how
a decreased and increased expulsion rate would affect the
cost outcome from both perspectives.
2.3. Procedure costs
Mean charges and mean net revenue collected by the
hospital were calculated for each pregnancy outcome type.
Costs for each diagnosis were estimated based on charges
and the institution's department-specific cost-to-charge ratio.
For the hospital, the costs of each pregnancy outcome are
the costs minus the revenue received from the state. For each
pregnancy outcome that resulted in a live birth, newborn
costs and revenue were considered.
For the state, the cost of each pregnancy outcome is the
amount paid to the hospital for each diagnosis.
All dollar values were converted to 2002 dollars using the
Consumer Price Index to adjust for medical inflation. Future
charges were discounted at an annual rate of 3% in keeping
with standard practice .
2.4. Contraceptive costs
Costs for the IUD program include the device as well as
provider time for insertion and removal. The hospital
provided an estimate of the direct costs of providing an
IUD (including device, insertion and removal fees) to EM
patients postpartum. The hospital's estimated costs of a
device, insertion and removal are $164, $106 and $88
dollars, respectively. These costs approximate those for the
state of supplying IUDs in the state family planning clinics
. Provision of contraception would not require additional
facilities beyond what is needed for the admitting diagnosis.
Long-term reversible contraceptive methods considered
include the intrauterine device, copper or hormonal. We
elected to model an IUD program, because it is the most
effective and cost-effective method, and only requires a
single intervention . Its use immediately postpartum is
well established in the medical literature, whereas newer
devices such as the implant lack long-term continuation data.
2.5. Probability of pregnancy outcomes
Pregnancy outcomes for our cohort were determined from
hospital records. We assumed that pregnancies averted by
the proposed program would have the same distribution of
vaginal or cesarean delivery, spontaneous abortion, threat-
ened abortion and ectopic pregnancy as that seen in our
2.6. Sensitivity analysis
We tested the robustness of our model by varying the IUD
discontinuation and expulsion rates and performing univari-
able sensitivity analysis on cost outcomes from both
perspectives. Inputs were varied from one half to twice the
In the 4 years following delivery, 18.5% of EM patients
had a subsequent admission at OHSU for an obstetrical
diagnosis (Table 1). The hospital loses money for every EM
patient with an obstetrical diagnosis seen, with negative net
revenue for all covered reproductive health DRGs (Table 2).
However, newborn care generates positive revenue for the
hospital (Table 1).
In the absence of a postpartum IUD program, 266 women
per 1000 EM patients will have a repeat pregnancy within 4
years at OHSU. For every 1000 women who receive an IUD,
we expect 122 pregnancies due to discontinuation or
expulsion and 18 pregnancies due to IUD method failure
(Table 3). The difference, 126 pregnancies, is our estimate of
pregnancies averted from a postpartum IUD program.
Program costs for an IUD, insertion and removal are
estimated for 1000 women at $328,000 (Table 4). In contrast,
the downstream costs over the ensuing 4 years for the
Observed pregnancy outcomes among 1037 women with Emergency
Medicaid who delivered at OHSU in 2002
Vaginal delivery with sterilization
Total pregnancy rate
Intrauterine device continuation rates and expected pregnancies among
women in a postpartum program
2002 Cohort (n=1037)2003200420052006
among IUD users
among women who
with IUD program
(per 1000 women)
306M.I. Rodriguez et al. / Contraception 81 (2010) 304–308
hospital from repeat pregnancies were $214,000 without
such a program and $119,000 with an IUD program in place.
This calculation demonstrates that the hospital would lose 70
cents per dollar spent on a postpartum IUD program or a
benefit–cost ratio of .30.
However, when we evaluated such a program from the
state's perspective, the results differed. Without an IUD
program, the state spends $2.1 million for repeat pregnancy
over the next 4 years. An IUD program would reduce those
costs to just over $1 million dollars. The state would save
$2.94 in costs for repeat obstetrical care for every state dollar
spent on an IUD program.
Sensitivity analyses showed the cost-effectiveness of a
postpartum IUD program to be robust. Varying the
discontinuation rates and expulsion rates did not affect
the positive savings to the state of financing postpartum
The program remains cost-effective for the state unless
first-year discontinuation rate becomes as high as 90%,
significantly higher than the expected postpartum IUD
expulsion rate of 12% . Program costs for the state
would break even with costs of subsequent care if the IUD
expulsion rate exceeded 70%. IUD costs would need to
exceed $10,500 per woman before the program would begin
to cost the state more than future pregnancy costs.
Our study models the costs and benefits for a hospital and
the state of Oregon of offering postpartum contraception to
women who otherwise would not have access to family
planning services. Using real hospital financial and enroll-
ment data, our study shows that providing postpartum
contraception is not cost-effective for a hospital. Considering
only the direct costs associated with an obstetrical diagnosis,
our data also shows that failure of the state to provide
contraception for all Medicaid participants results in
financial costs for the public and denies women the
opportunity to plan their families.
Recent immigrants to the US are at increased risk for
unintended pregnancy due to policy that limits access to
preventative health care, including contraceptives. Our study
shows the effect of transferring responsibility for preventa-
tive care to the acute setting; coverage of postpartum
contraception for an underinsured population is not cost
beneficial for a hospital. While the hospital loses money for
every EM patient with an obstetrical diagnosis, the rate of
repeat pregnancy at the same hospital is not high enough to
outweigh the costs of implementing an IUD program. The
hospital also generates revenue from newborn care.
Our study demonstrates that policies that shift responsi-
bility for family planning costs to a hospital result in
markedly increased costs for the state. Because hospitals do
not face enough future costs from same-hospital pregnan-
cies, they do not have an economic incentive to fund an IUD
program. However, the state would save money by funding
such a program. Other studies have also corroborated the
cost efficacy of family planning programs from a public
perspective [1,2,14,16,24–26]. Policy regarding coverage
for new immigrants varies widely by state. A few states, such
as California, have recognized the public savings of offering
contraception to all who financially qualify, regardless of
citizenship status.[5,7]. Some states offer postpartum
coverage for 2 months following a delivery . The
majority of states, including Oregon, have not chosen to
spend state funds to expand coverage for immigrants beyond
what is required by the federal government .
This study supplies evidence that failure to provide family
planning options for postpartum women with EM results in
increased costs for the state, even when considering only the
direct costs associated with an immediate hospital admission.
This study provides a conservative estimate of pregnan-
cy-related visits that would be averted for the hospital with
the institution of a program offering postpartum IUDs.
While our study utilized real costs at a single institution for
many of the model inputs, it is not without limitations. The
hospital does not cover elective, uncomplicated abortions,
and so our model does not capture that subset of
pregnancies and underestimates the total costs of unintend-
ed pregnancy. Also, our study only includes data from a
single hospital. While this hospital provides the largest
proportion of EM care in the area, our estimates of repeat
pregnancy are specific only to that hospital and do not
capture repeat pregnancies seen at other area hospitals, as
statewide data on repeat pregnancies is not available.
Calculating the repeat pregnancy rate from a single
institution results in a much lower estimate of pregnancy
rates than is typically seen. This provides a conservative
estimate of cost savings. Additionally, our study only
considers women who had repeat pregnancies in their first 5
years in the US. We do not capture the small subset of
women who had a birth on EM, then became eligible for
SM during a repeat obstetrical admission.
With respect to estimating the costs for the state, our
model only includes direct costs associated with admission
for an obstetrical diagnosis. An infant born to a woman with
EM is eligible for a full array of public services, and our
Annual costs for the hospital and state of a postpartum IUD program per
1000 women with Emergency Medicaid
2002 Cohort (n=1037)2003200420052006
Costs without IUD program
$213,278 $637,126 $631,010 $636,210
Costs of IUD program
Costs of pregnancies expected
with an IUD program
for the state
$102,310 $297,970 $356,180 $395,320
Net savings for the state$4968$324,229 $257,899 $225,784
307M.I. Rodriguez et al. / Contraception 81 (2010) 304–308
model does not account for this — again, providing a
conservative estimate of future costs of unintended preg-
nancy. Previous work has estimated the cost of public
programs for a newborn to cost $9437 and $19,329 to raise a
child to ages 2 and 5 years, respectively . Our model also
assumes that all newborns are healthy, thus underestimating
IUD costs in our model are based on the costs for the
state's family planning expansion program of providing an
IUD (device, insertion and removal). While these costs are
considerably less than wholesale prices, sensitivity analysis
indicates that costs for an IUD would need to exceed a
threshold value of $10,000 before our conclusions would
Hospitals caring for a high proportion of the medically
indigent are penalized by legislation that mandates care
without adequate compensation . These policies shift
costs from the federal government to local hospitals and
communities and in the case illustrated in this study provide
improper incentives to provide cost beneficial care. Scarce
public health dollars must be allocated judiciously, and
contraception is well established as a cost-effective use of
public dollars [1,14,16,24,26]. Research in the area of
transplant medicine and vascular surgery has also demon-
strated that failure of the government to cover preventative
care for immigrants, regardless of documentation status,
results in increased costs for the community .
While the economic incentives to develop and provide an
IUD program are not properly aligned at the level of
individual hospitals, such a program would apparently save
health expenditures at the state level. States should make an
effort to provide such services in the effort to reduce overall
health expenditures while also providing better care. To
verify whether such programs actually will save health
expenditures, states should compensate hospitals for provid-
ing these services by funding IUD placements.
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