IMPORTANCE Together, preterm birth and low birth weight are the second-leading cause of infant mortality in the US and occur disproportionately among Medicaid-paid births and among the infants of Black birthing persons. In 2012, South Carolina's Medicaid program began to reimburse hospitals for immediate postpartum long-acting reversible contraception (LARC) separately from the global maternity payment. OBJECTIVE To examine the association between South Carolina's policy change and infant health. DESIGN, SETTING, AND PARTICIPANTS This population-based cohort study using a difference-in-differences analysis included individuals with a South Carolina Medicaid-paid childbirth between January 2009 and December 2015. Data were analyzed from December 2020 to July 2021. EXPOSURES Medicaid-paid childbirth after March 2012 in South Carolina hospitals that had implemented the policy.MAIN OUTCOMES AND MEASURES Immediate postpartum LARC uptake, subsequent birth within 4 years, subsequent short-interval birth, days to subsequent birth, subsequent preterm, and low-birth-weight birth within 4 years.