Over on X, a podcast host named Abby Libby wrote that she only had to pay $6,000 to deliver her second son at just 33 weeks of gestation. Three months on, the mother and baby seem to be doing well. This should be considered a success story of the American healthcare system, right?
According to Libby, wrong.
Libby reiterated in the comments that her gripe is not with the insurance system, which evidently paid nearly all of the $200,000 bill. Rather than complaining, as socialists often do, that someone else should have to pay for her family’s medical care, Libby seemed to argue that no one should have had to pay, because the hospital didn’t have the right to charge the overwhelming majority of the bill to begin with.
As a function of basic demand elasticity, lifesaving care of a very premature fetus absolutely should cost more than anything else in your life. Presumably, any mother, especially a pro-life one, would indeed hand over their lifetime earnings (often equal to the equity in your home) to save their child.
But even if we operate under the Marxist framework of the labor theory of value, six figures is not an inflated price for the sheer input of care in question.
Libby’s baby was born at 33 weeks of gestation with a birth weight just shy of 4 pounds, but she claims he didn’t grow for the final two weeks of her pregnancy. She also had severe preeclampsia, which doctors typically treat with weeks of antihypertensive and anticonvulsant medication to prevent fatal organ failure or seizures.
After a medically precarious delivery, a very preterm neonate requires immediate temperature and oxygen stabilization, constant monitoring of vitals and for infection, artificial nutrition assistance by IV, and medication management. Neonatal Intensive Care Units are also staffed 24/7 by multiple doctors and nurses with multiple degrees under their belts. It is for good reason that Level III NICU stays can cost at least five figures each day.
Ironically enough, the supposed inflation of NICUs has actually lagged behind the rate of general newborn care. According to a 2023 report by the Health Cost Institute, the daily inpatient spending for NICU Level III admissions rose 17% from 2017 through 2021, almost exactly in line with the 16% increase in the consumer price index in that time. By contrast, the daily spending on general newborn care rose 42%.
None of this is to mention the added cost of preeclampsia, which Libby said she had already suffered during a prior pregnancy and from which her renal function did not fully recover. A 2019 study found that the average combined cost of treating a mother and newborn after a case of preeclampsia is more than three times as expensive as paying for an uncomplicated birth. Caring for an infant born at 33 weeks and a mother with preeclampsia is nearly 10 times more expensive than an uncomplicated birth.
It’s possible that this disparity includes some of the price chicanery that results when hospitals markup everyday items such as Tylenol or bandages, but that’s not most, or even much, of the cost. ProgenyHealth, a maternal health company that exists to help women achieve better, cheaper birth outcomes, including NICU management and bill review service, advertises that its bill review service “savings can be identified on 20-30%” of the claims it reviews for clients.
“As a result, our work typically yields savings of $7k-$10k per finding, representing savings of $1k-$3k per member managed by NICU Utilization Management,” the company boasts. In other words, a 1% to 3% reduction of the average bill for a 33-week birth with preeclampsia.
As I have written about extensively, so far as the United States overpays for healthcare, it’s not to fund a producer surplus but to subsidize the research and development enjoyed by everybody else. It’s not that the bills produced by pharmaceutical companies are too high, but rather that the cost burden should be forced upon the other countries that have ridden on the coattails of American largesse since Bretton Woods.
If Americans unilaterally stop paying the bill — either via individual patients who benefit from lifesaving services or via social spending packages such as the generational redistribution of Medicare, which approaches an 11% automatic payment cut with insolvency in the next decade — supply will bend to meet demand. In other words, shortages mean people will die of conditions we consider treatable or curable today.
In a 1972 study of data from a dozen years prior, the Centers for Disease Control and Prevention found that a baby with the same gestational period and weight as Libby’s had only a four-in-five chance of living at least a year. For every 100 babies born at fewer than 37 weeks of gestation and a birth weight of 5.5 pounds or fewer, the CDC found that 31 died before their first birthday. Babies in the more narrow range of 3.3 pounds to 4.4 pounds fared slightly better, with 21 out of 100 dying before their first birthday.
Only decades before this, very preterm babies regularly died from bacterial infections that we now cure with antibiotics. A 33-week fetus barely even had a chance at survival until the tail end of the 19th century, when the French invented the incubator.
The laws of supply and demand do not cease to function just because the stakes of healthcare are life and death. Rather, the perfectly inelastic demand of a mother’s love means that she will accept a bill that is the price of her house. The only way to maintain an adequate supply of medical care is, as mentioned earlier, to solve the global free rider problem and continue to innovate.
Part of the reason billionaire philanthropists are so obsessed with donating and disseminating vaccines is that, unlike the overwhelming majority of other lifesaving medical care, vaccines are quite literally a dollar a dose. If Microsoft CEO Bill Gates can either spend $200,000 on two weeks of treatment to save one very preterm baby or spend $200,000 to fully inoculate 100,000 babies from measles, mumps, and rubella, the choice is obvious. The Gates Foundation estimates that vaccinating over a billion children over the past quarter century for diseases ranging from HPV to rotavirus has saved 19 million lives for a total cost of $22 billion. That comes to $1,000 per life saved, and in prompting other countries to commit to widespread vaccine consumption while aggregating demand, the Gates Foundation has actually brought the cost curve for vaccines down.
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The American healthcare system is not perfect, and since it subsidizes the rest of the world, it’s arguably underfunded. More than one-third of the nation’s hospitals operate at a loss, and actual provider pay for doctors and nurses shamefully lags behind the growth of the income accrued by hospital executives, who benefited from the industry consolidation intentionally instigated by the Affordable Care Act.
But the alternative to the sheer cost of the system — not who pays it, but rather how much money providers manage to collect — is the despair of dead babies and mourning mothers.
