Who Gets Cut? Decomposing the Payer Gap in Cesarean Delivery Across New York State Hospitals

Abstract

Cesarean delivery accounts for roughly a third of all births in the United States, at proportion that continues to grow annually. Yet, the degree to which its use reflects a justified use on the grounds of clinical necessity, versus an improper use motivated by non-clinical forces remains contested. This thesis investigates whether the probability of cesarean delivery differs by insurance type among low-risk patients in New York State, and whether that difference arises from the hospitals where Medicaid and commercially insured women deliver or from how they are treated within the same facility. Drawing on roughly 2 million inpatient delivery discharge records from the New York SPARCS database spanning 2016 through 2024, then matched to institutional data from the CMS Provider of Services file, the study constructs three analytic cohorts at varying levels of clinical stringency and estimates hospital fixed-effects linear probability models to decompose the observed payer gap. The results indicate that commercially insured patients undergo cesarean delivery at meaningfully higher rates than Medicaid patients across all three cohorts, with the primary low-risk cohort showing a gap of 5.5 percentage points. Contrary to what a pure sorting explanation would predict, the gap does not attenuate when hospital identity is held constant; instead, the within-hospital estimate slightly exceeds the aggregate figure, suggesting that between-hospital sorting marginally masks, rather than inflates, the disparity. The gap has also widened over the study period, driven almost entirely by rising cesarean rates among commercially insured patients while Medicaid rates remain flat within the same institutions. Among hospital characteristics, the urban-rural distinction emerges as the only statistically significant moderator: the payer gap is roughly two percentage points narrower at rural facilities than at urban ones. These findings point to a disparity rooted in the clinical encounter, one that existing Medicaid-focused reduction policies are not structured to reach. The thesis concludes with recommendations for patient visibility initiatives, cross-payer incentive alignment, reimbursement reform, and standardized labor management protocols designed to address the commercial-side trajectory that current policy overlooks.