Population Planners’ Bad Math

Abortion advocates and population planners eagerly promote the idea that preventing births saves money.

To the contrary and as was already demonstrated in a recent First Things article, the birth of anyone, poor or not, will yield substantial economic benefit. Specifically, in Texas the \$11,000 Medicaid-birth cost will on average return \$430,000, or thirty-nine times the investment, in the form of income, property, and sales taxes collected over a forty-five-year working life.

Although state-funded population planners find the cost savings claim self-affirming and program-justifying, it is bad math.  My prior article explored the short-sighted approach of an expense-only focus and highlighted that the programs cost federal, state, and local governments significant amounts of foregone revenue. A new article, recently published in full in the Linacre Quarterly, critically explores the question of expense savings.

The methodology by which the Texas Women’s Health Program (TWHP) assesses and reports cost savings requires that the actual birth rate of TWHP enrollees be compared to an earlier, base year birth rate for all women with Medicaid-paid births, in order to calculate “births averted” for TWHP enrollees (which averted births are presumably the result of TWHP participation). These theoretically averted births are then multiplied by the average cost of a Medicaid-paid birth to derive “Savings Due to Births Averted.”

A TWHP report claims, “The program is considered cost neutral because Total WHP Expenditures are less than the Target Expenditure (i.e., Savings due to Births Averted.)” This is a critical conclusion for TWHP because “Savings Due to Births Averted” must exceed the cost of the program.  TWHP claims that the program meets this test; but the method used to arrive at these results is misleading.

The flaw lies in the comparison used to calculate savings. The problem is that a group comprised only of women who intend to prevent pregnancy (TWHP enrollees) is compared to a base year group comprised both of women open to pregnancy and those who seek to avoid it. As a group, women seeking to avoid pregnancy should experience markedly lower birth rates than a broader group of women, some of whom are open to pregnancy.

Consider the silliness of a museum curator or wine steward who proudly compares her collection to that of the average household, or the meaningless boast of an oncologist who compares his cancer cure rate to that of general practitioners.  TWHP is setting a similarly low bar to trumpet its claims of effectiveness.

To calculate the true savings attributable to TWHP’s efforts, an apples-to-apples comparison must be made of (a) the birth rate attributable to TWHP’s enrollees in 2008, or 4.3 percent, and (b) the birth rate attributable to comparable women, specifically, Texas women seeking to avoid pregnancy in the base year period. As is detailed in the Linacre Quarterly article, using two methods and national health statistics from 2001, more comparable base year birth rates were estimated.  These methods resulted in adjusted base year birth rates of 6 percent and 4.6 percent, substantially less than TWHP’s base year benchmark birthrate of 11.5 percent.  In other words, TWHP overstates the standard it seeks to undershoot by 1.9 to 2.5 times.

With the adjustments, TWHP is no longer cost neutral because program expenditures exceed “savings due to births averted” by multi-million dollar margins. Additionally, the second proposed adjustment method results in a birth rate that is very similar to the actual birthrate of TWHP enrollees (4.6 percent versus 4.3 percent), which suggests nearly complete TWHP ineffectiveness and calls into question the very reason for its existence.

These results are relevant beyond Texas. A total of thirty one states offer Medicaid expansion programs for family planning services. Like Texas, most of those programs are offered through the CMS waiver process, making it likely that many states are reporting inflated results in a manner similar to Texas. If Texas’ 2008 miscalculation is any indication, CMS women’s health programs are materially overstating budgetary effectiveness.

We now know two things. From the first article, subsidizing new lives is a revenue-positive proposition; and, from the recent Linacre Quarterly article, preventing new lives is a money-losing venture. Perhaps taxpayers should take a closer look at the revenues lost and expenditures wasted on these programs.

Combined, the two articles strongly suggest that, instead of wasting and losing money by attempting to prevent births through contraception and abortion, states should dedicate more resources to real health care for growing families.

Keith Riler is a financial analyst who has written for the American Thinker, Faith magazine, Texas Right to Life, and LifeNews.

Become a fan of First Things on Facebook, subscribe to First Things via RSS, and follow First Things on Twitter.

7.30.2013 | 11:07am
While I appreciate the proof of the economic value of each and every life, I hate the fact that some people demand such calculations in order to make a decision on whether a person lives or dies and even more so that some justify killing based on such calculations, whether accurate or not. (I understand that the author of this post does not fall within that group.) The next time such folks watch "A Christmas Carol", I hope that they recognize that they are represented by the unrepentant Scrooge, miserly fools who know the cost of everything and the value of nothing. Let us hope and pray that they too receive a visitation sufficient to open their eyes and soften their hearts.
7.30.2013 | 12:29pm
How does the tax collected compare with the future medical costs, public school costs including likelyhood of need for ESL/special education, prorated share of road building/maintenance/justice system/military costs? You can't just look at taxes collected; you also have to consider services consumed.
7.30.2013 | 1:56pm
Al T says:
TG, how Malthusian. Re the schools, if every woman in the Texas contraception program gave birth, the average size classroom might grow from 30 to 30.3 kids. Regarding roads and other costs, these new people would be earning income that is untaxed as well - they could afford a toll road or two. Taken to it's full extreme, your logic is the problem with the liberal-death axis, it implodes on its own flawed static analysis - ie no births/demographic inversion, no growth, no income, no future.
7.30.2013 | 4:02pm
In one of his plays, Oscar Wilde wrote, "What is a cynic? A man who knows the price of everything and the value of nothing."
7.31.2013 | 11:52pm
Al T Your conclusions are only valid if the women delaying pregnancy by contraceptives or having first term abortions is an exceedingly small number...but the conclusion goes along with the bizarre nature of this entire article...reducing children to economics Seesh where did you folks go insane RGO
type the text above in the box below