Homebirth is about creating a safe birthing environment in your home while protecting the woman's privacy and maintaining an intimate family atmosphere.
When it comes to safety issues, you can think of homebirth as bringing the safety of a birth center to your home. Homebirth midwives carry the same kinds of equipment and medications that you would find in a birth center. This includes hand-held Dopplers and state-of-the-art machines for continuous monitoring of the baby's heart rate, if necessary. We carry suctioning equipment and oxygen for resuscitating the baby as needed. We carry anti-hemorrhagic medications to stop a postpartum hemorrhage. We also carry suturing equipment, although it's not often necessary.
In fact, midwives practicing in homes or out-of-hospital birth centers can do everything that a midwife in a hospital could do. A 2009 Canadian study  compared safety rates for planned homebirths and planned hospital births attended by the same cohort of midwives. They also evaluated the safety of planned physician-attended hospital births for a matched population of low-risk women who could have opted for homebirth or hospital birth with the midwives in the first two groups. Of these three groups, the homebirth group had the best safety statistics and the lowest rates of interventions and serious perineal tearing or hemorrhage; the babies born at home required resuscitation less often than those born in the hospital and were less likely to have meconium aspiration and less likely to require hospitalization. So outcomes for homebirths were better than for births in the hospital setting with the same midwives or with physicians providing care for a matched population of low-risk mothers.
Professional midwives practicing in all settings work to recognize minor problems and correct them before they become major problems. In the hours leading up to a birth, if a serious problem develops and a cesarean becomes necessary, there is a safety margin of 30-75 minutes in which to assemble a surgical team. For this reason, many midwives recommend that women labor and birth within 30 minutes of a hospital, to be on the safe side in case a serious emergency does arise; this provides the same safety margin for women birthing at home as in the hospital.
Midwives are trained to handle the life-threatening emergencies that can occur suddenly within a few minutes of the birth, such as shoulder dystocia, postpartum hemorrhage, and placental problems. And, in fact, every one of these emergencies occurs at a time when cesarean section is no longer an option.
A landmark study on homebirth safety  was published in the British Medical Journal in June, 2005. This study showed that homebirths and hospital births had similar overall safety rates, but that there were fewer interventions and fewer complications for the homebirths. This was a prospective study with a rigorous research design and the most comprehensive North American study about place of birth. A suite of homebirth safety studies from the UK in 1996  also showed home to be as safe as or safer than a hospital for low and moderate-risk women. Homebirth opponents sometimes cite studies that show homebirth to be less safe than hospital birth, but these studies use statistics from births with no midwife in attendance or high-risk births far from hospitals.  In a 1999 review of all the literature on the relative safety of different places, of birth, Zander and Chamberlain wrote, "No evidence exists to support the claim that a hospital is the safest place for women to have normal births." 
There are several reasons why midwife-attended birth at home is safer than in the hospital for most situations. The first is that birth is a natural bodily process that works best when there's no interference. Having a midwife attending you in your own home is the lowest level of interference with birth, just short of having no birth attendant at all. When you're at home, there's no risk of receiving dangerous interventions, such as pitocin and epidurals, which introduce additional risks. Most problems that arise at home can be corrected through giving the mother more fluids or food or through position changes. One exception is the issue of thick meconium, and many midwives would transport to the hospital for thick meconium.
The second reason that homebirth is safer is that the infection rate at homebirths is less than half of that at hospital births. There are several reasons for this: the baby is born with antibodies that were passed from the mother to the placenta. This includes immunity to the family's household germs. Your new baby is protected from hospital-acquired infections at home. In addition, because mothers and babies are kept together all the time, the baby's immature immune system functions optimally. Also, this constant mother-baby interaction fosters successful breastfeeding, which is your baby's best protection against infection. Since midwives provide continuity of care and comprehensive mother/baby care, we can provide a level of care that is not possible with the assembly-line care provided in hospitals.
Many women wonder whether they’ll be able to give birth at home without drugs; it’s been my experience that most women do just fine. In fact, women who’ve had babies both at home and in the hospital have told me that it felt much less painful at home, in familiar surroundings, with birth attendants who could cater to their needs.
In childbirth education classes, you learn about the fear-tension-pain cycle, where fear increases the tension, which increases the pain, which increases the fear, etc. until a woman is in terrible pain. The opposite cycle could be called the confidence-relaxation-comfort cycle where the more confident you are, the better able you are to relax and the more comfortable you'll be, which increases your confidence, etc. This allows your body to take advantage of endorphins, which are the natural pain relief that your body provides in natural childbirth. As a laboring woman's body produces more oxytocin to increase the contractions, she also produces more endorphins for pain relief. I've seen women become more and more relaxed as their labor progresses and their endorphin levels climb to provide wonderful pain relief. Being in your own home increases your confidence and allows you to relax into your labor very nicely. And, of course, if you have one of the beautiful birthing tubs set up, that provides marvelous pain relief.
When we talk about waterbirth, we're really talking about having a birthing tub available for use by the mother during labor, and then some women choose to stay in the tub for the birth. When the baby is born in the tub, the baby is brought right up to the surface, before the first breath. There are lots of advantages to being in the tub for labor - the increased buoyancy seems to help the baby get into the best possible position, and the moms often like the sense of the tub as their private place, where they may feel safer. The warmth of the water also increases the blood flow to the uterus, which reduces the pain. The increased blood flow to the uterus also increases the blood flow to the placenta, so more oxygen is getting to the baby. Babies born in the water are usually in excellent condition, and they love being in the warmth of the tub for those first few minutes. As a midwife, I also like waterbirth because the cleanup is so easy. I had a client who said that her favorite reason for birthing in the tub was that she wasn't afraid that someone would drop the baby. And waterbirth seems “cleaner”, which dads like.
The experience of birth for the baby at home is usually very gentle. We know that babies recognize voices during late pregnancy, so the baby would recognize the midwife's voice as someone familiar. We don't use any devices at home that go inside the uterus or might be uncomfortable for the baby, such as the fetal scalp electrodes that go into the baby's scalp. Women tend to birth in positions that minimize stress on the baby during the birth, such as upright positions or hands and knees or birthing in the tub.
Many homebirth couples choose to catch their own baby, and the assessment of baby's well-being right at birth can easily be done with the baby still in the mom's arms. So I may not even hold the baby until several hours after the birth, when we weigh the baby. Most parts of the newborn exam can be done with the baby still in the arms of the mom or dad. And, of course, there's no rush to cut the cord; some of my clients want it cut around 20 minutes after the birth, and sometimes they ask me to wait for several hours after the birth.
Families who already have a little one at home appreciate how much easier it is for the older sibling to adjust to a new baby when their mom doesn't disappear for a few days. It's wise to have a special family friend or a professional child doula there to care for the older child during the birth, but many siblings sleep right through the excitement.
Different couples do different things about arranging backup care in case something occurs that is outside the midwifery scope of practice. Some couples arrange their own backup care by receiving concurrent care from a hospital-based practice. Some couples are happy to know that they can always get care from the on-call physician at one of the friendlier hospitals in the area, even without making plans in advance. The rate for transfer of care for younger first-time moms or for women who've had a baby before is quite low - less than 5%. The rate for transfer of care for older first-time moms is higher, around 25%. Based on my years of work as a doula, it's been my experience that the outcomes for transports for complications are usually better than if the woman had been planning a hospital birth.
People often have a lot of questions about the logistics of homebirth. I have my clients pick up the birthing tub several weeks before the due date, so they can set it up whenever they feel it's the right time. The family also gets a birth kit of disposable supplies for the birth, including a lot of paper products to contain the fluids that accompany birth.
Here in California, most insurance companies cover my services as they would cover any out-of-network provider. Since there is no hospital fee associated with homebirth, it costs much less than a hospital birth, so some insurance companies will negotiate an in-network rate. Even some HMO's will agree to cover homebirth. But insurance coverage for homebirth varies tremendously from state to state and from one health insurance carrier to the next. At one extreme, Aetna has nationwide homebirth exclusion, based on the flawed Pang study in Washington State, the irrelevant Australian Outback study and statements from biased medical associations. "Aetna considers planned deliveries at home and associated services not medically appropriate.  At the other extreme, Florida mandates that all insurance carriers covering maternity services must cover licensed midwifery services at home or in a birth center. This state mandate trumps Aetna's homebirth exclusion, so lucky Florida residents with Aetna insurance are covered for homebirth. 
Obviously, medical associations of obstetricians and pediatricians have a significant conflict of interest when it comes to evaluating home as an appropriate place of birth because they attend births in hospitals, not in homes. A more objective association, the American Public Health Association, passed a resolution in 2001 to increase access to out-of-hospital birth attended by credentialed direct-entry midwives. 
From a patriotic point of view, homebirth is good for the country. The savings associated with homebirth as the norm are estimated to be around $15 billion annually.  This would go a long way towards easing the strain on our nation's healthcare dollars, or could be used to generate a hefty tax cut!
On an individual level, if you're paying out of pocket for a birth, you may end up spending $2000-$5000 for a homebirth, depending on where you live and exactly what services you get. This contrasts with bills for hospital births that range from $8000 to over $30,000 for vaginal births, and as high as $50,000 for cesarean births, which involve additional days in the hospital for mother and baby. 
Another important detail: babies born at home get a birth certificate and social security number without any problems.
Homebirth provides an opportunity for a birth experience that is beyond
a family's greatest hopes, and it satisfies the deepest desires of the
most important person at the birth - the baby.
1) Outcomes of planned home birth with registered midwife versus planned hospital birth with midwife or physician
CMAJ. 2009 Sep 15;181(6-7):359-60.
interval for emergency caesarean section is 75 minutes
BMJ 2004;328 (20 March), doi:10.1136/bmj.328.7441.0
of planned home births with certified professional midwives: large prospective
study in North America
Kenneth C Johnson, senior epidemiologist, Betty-Anne Daviss, project manager
BMJ. 2005 Jun 18;330(7505):1416.
4) British Suite of Studies, 1996
5) Statistics from births with no midwife in attendance
of planned home births in Washington State: 1989-1996.
Pang JW, Heffelfinger JD, Huang GJ, Benedetti TJ, Weiss NS.
Obstet Gynecol 2002 Aug;100(2):253-9
Collection of other commentaries at:
High-risk births far from hospitals
death associated with planned home birth in Australia: population based
Hilda Bastian, Marc JNC Keirse and Paul Lancaster
BMJ 1998; 317:384-388
Critique contained within this larger article by Maternal and Child Health expert for the WHO, Dr. Marsden Wagner:
Collection of other commentaries at:
of birth [full
Luke Zander, Geoffrey Chamberlain.
BMJ 1999;318:721-723 ( 13 March )
Numerous other studies about homebirth safety:
7) Aetna's homebirth exclusion
8) Florida law requires that maternity care
coverage include the
services of certified nurse-midwives and midwives licensed pursuant to
Chapter 467 and the services of birth centers licensed under
ss. 383.30-383.335.-- emphasis supplied [See Florida Statutes,
s.626.6406; s.627.6574; and s. 641.31(18)].In requiring such coverage,
Section 467.002, F.S. specifically recognizes the need for a person to
have the freedom to choose the manner, cost and setting for giving
birth. The law requires that maternity coverage include midwifery
services and provides that an insured or enrollee be given the option
of choosing the setting for receiving such services. Therefore, no HMO
contract or insurance policy may directly or indirectly deny
reimbursement for midwifery services rendered in a home birth setting.
Insurance Guide - The Florida Department of Financial Services
See item #3
9) American Public Health Association endorsement of homebirth
10) Schlenzka, Peter F. 1999. "Safety of Alternative Approaches to Childbirth." Unpublished Dissertation. Palo Alto, Calif: Stanford University.
cost-effectiveness of home birth.
Anderson RE, Anderson DA.
J Nurse Midwifery. 1999 Jan-Feb;44(1):30-5.