Why is the C-section rate so high?

Yet another possible reason for the country’s high C-section rate, as we mentioned, is that physicians are routinely paid more for a C-section than they are for a vaginal delivery—on average, about 15 percent more. Why is this the case? The prevailing logic is that a C-section is a major surgery, so the physicians’ payment should reflect the greater potential for complexity. But this logic rests on a crude generalization. Vaginal birth can be very straightforward, but it can also be very complicated and time-consuming. The same is true for a C-section. Despite this, payments are fixed—they reflect the mode of delivery, not the difficulty.

You could imagine an alternative system that just paid for time, per hour of labor—which would acknowledge the fact that labor management tends to take longer than C-sections; after all, a C-section performed during labor by definition cuts short that labor. Such a system would also account for the costs physicians accrue by spending more time in the hospital: less sleep, less time with family, less time to see patients in the office. But such a system might then wrongly incentivize slow labors, or avoiding C-sections when they’re needed, so a whole different set of problems would emerge.

At any rate, the fact is that the existing system creates a financial incentive to perform a C-section—or a disincentive to manage labor—that may make the difference in the clinical gray areas.