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This chapter discusses two aspects of preterm birth and the public sector. The first aspect is the burden of illness associated with preterm birth and its effects on public entitlement and benefit programs. Because preterm birth occurs disproportionately among populations of low socioeconomic condition, the costs associated with prematurity generate a considerable burden on public programs, many of which target low-income and other vulnerable populations. This chapter thus reviews some of the major public programs that incur costs because of preterm birth. In addition, because the consequences of premature birth may last a lifetime, public programs are potentially affected for many decades. Thus, the burden of illness in association with preterm birth to the public sector is long term, highlighting the importance of prevention of premature birth.

The second aspect is the potential for public policy to be used to reduce the rate of preterm birth and improve the health outcomes for infants born preterm. For instance, a recommendation from the 1985 Institute of Medicine report Preventing Low Birthweight (IOM, 1985) was that generous eligibility standards should be set to maximize the possibility that poor women may qualify for Medicaid coverage and thus be able to obtain prenatal care. The chapter thus discusses the evidence from policy initiatives, such as the expansions of Medicaid, and discusses future policy options that can be used to reduce the rate of preterm birth.


Preterm birth occurs disproportionately in populations of low socioeconomic condition. Because many public programs target these populations, the costs of preterm birth to the public are substantial. For example, 40 percent of the medical costs associated with preterm births are paid for by Medicaid (Russell et al., 2005). The costs of preterm birth, however, extend far beyond the medical costs associated with birth. As has been documented in previous chapters, preterm birth has significant lifetime consequences for many infants born preterm. These costs and the associated public burden can extend far into the future—an average of 77 years on the basis of today’s life expectancies (NCHS, 2004a).

The consequences of preterm birth span a broad range of services and social supports, along with their associated costs, including medical costs, educational costs, income supports, and costs for other public programs, such as the foster care system. Little is known about the magnitude of the public burden for infants born preterm, aside from the costs associated with the medical expenditures paid for by Medicaid. On the basis of the estimates in Chapter 12 of the medical costs for the first 7 years of life (in present discounted value) for infants born preterm, Medicaid costs for the

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