Policy Resource

Michigan Finds Favorable Return on Investment for Home Visiting

Feb 9, 2016

In January 2014, Michigan joined a return on investment (ROI) learning community sponsored by the Association of Maternal and Child Health Programs (AMCHP).

The state was interested in participating in the learning community to apply an economic analysis to measuring the worth of maternal and child health programs. They proposed to study the state Maternal Infant Health Program (MIHP). MIHP provides Medicaid-eligible mothers with care coordination and intervention services via 18 visits that begin prenatally and continue after birth. State leaders recognized that an ROI analysis would enable the state to test whether the program was cost-effective in addition to being service-effective.

A team was formed, which consisted of researchers from Michigan State University (both a health economist and those involved in the evaluation of MIHP), staff from the Michigan Department of Health and Human Services, and state Medicaid staff with expertise in both policy and evaluation. The team came together for regular calls to discuss how the ROI would be approached and to brainstorm solutions to challenges that they encountered. In addition to the core team, AMCHP facilitated meetings with expert consultants to support the Michigan study. Consultants were from the Centers for Disease Control and Prevention, the Los Angeles County Health Department, and Maricopa County, Arizona.

First, the team answered the question: How much do MIHP prenatal services cost? Then, using data from the Healthcare Cost and Utilization Project, they studied the question: How much does preterm birth cost? Finally they looked at the question: How much might Medicaid save? An earlier study found that preterm births to non-MIHP mothers exceeded those to MIHP-enrolled mothers by 2.9 per 100 (Roman et al, 2014). The analysis ultimately revealed a 138% ROI for the MIHP program. For every $1 spent on prenatal services for MIHP participant mothers, Medicaid saves $1.38 in the costs associated with preterm birth in the first month of life. Preterm infants are more likely to require additional health and social services following that first month of life, so by all accounts this ROI estimate is most conservative.

To review the earlier study: Roman, L., Raffo, J., Zhu, Q., Meghea, C. A Statewide Medicaid Enhanced Prenatal Care Programs: Impact on Birth Outcomes. JAMA Ped. 2014; 168(3):220-227.

Suggested citation: Peters C, McKane, P. Meghea, C. Michigan Department of Community Health. RETURN ON INVESTMENT: Cost Savings to Medicaid from Maternal Infant Health Program due to Reduction in Preterm Birth Rate. ROI Fact Sheet Series Volume 1, Issue 1 (2015).

Find additional information about the ROI study here.

Updated February 2016.

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