Background
Preterm birth is the greatest cause of death up to five years of age and an important contributor to lifelong disability. There is increasing evidence that a meaningful proportion of early births may be prevented, but widespread introduction of effective preventive strategies will require financial support.

Aims
This study estimated the economic cost to the Australian government of preterm birth, up to 18 years of age.

Materials and Methods
A decision‐analytic model was developed to estimate the costs of preterm birth in Australia for a hypothetical cohort of 314 814 children, the number of live births in 2016. Costs to Australia’s eight jurisdictions included medical expenditures and additional costs to educational services.

Results
The total cost of preterm birth to the Australian government associated with the annual cohort was estimated at $1.413 billion (95% CI 1047‒1781). Two‐thirds of the costs were borne by healthcare services during the newborn period and one‐quarter of the costs by educational services providing special assistance. For each child, the costs were highest for those born at the earliest survivable gestational age, but the larger numbers of children born at later gestational ages contributed heavily to the overall economic burden.

Conclusion
Preterm birth leaves many people with lifelong disabilities and generates a significant economic burden to society. The costs extend beyond those to the healthcare system and include additional educational needs. Assessments of economic costs should inform economic evaluations of interventions aimed at the prevention or treatment of preterm birth.