Friday, January 20, 2012

How much does it cost to have a baby?

When my wife delivered our second child in 2008, the hospital sent our health insurance company a bill for $8569. The insurance company then wrote off $4117 of that bill, paid $4352, asked us for a copayment of $100. When we found out last year that we were expecting again, we noted that my wife's new insurance plan requires us to pay 20% coinsurance for all non-preventive care. That would have amounted to several hundred dollars of our 2008 bill, and knowing the rapid rate of health care inflation, we thought it would be good to find out how much it would cost this time around. So we went back to the same hospital, where we expect our third child to be born in a few weeks, and asked if they could give us an estimate of the charges. It seemed like a reasonable enough request, especially since the pre-admission consent form we signed specifically said that patients had a right to know what the hospital charged for its services.

We're just looking for a ballpark number for our flexible savings account, we said. The charge for an uneventful labor, vaginal delivery and single overnight stay. We understand that unexpected things can happen in childbirth, and we won't hold you to it.

The hospital representative we spoke with clearly wanted to be helpful. She called the billing office, the labor and delivery floor, every place in the hospital she could think of that might have that information. But in the end, no one could give us an answer to a seemingly simple question: how much does it cost to have a baby at your hospital?

And the truth is, even if they had, we would have had no way of knowing how much our insurance company would have actually paid. Hospitals routinely inflate their listed charges, knowing full well that insurers will want to negotiate deep discounts. The only people who actually pay the listed hospital charges - analogous to the sticker price on a new car - are uninsured patients who aren't poor enough to qualify for free or discounted care.

The whole idea of "consumer directed health care" is that patients who anticipate medical expenses in advance  can shop around to get the best prices. We had nearly nine months to get ready for having a baby, and that should have been plenty of time. But consumer directed health care doesn't work when no one can tell you the price. A federal report issued last October confirmed what most doctors have known all along: most medical practices and hospitals either can't, or won't, provide estimates about the costs of commonly provided services such as diabetes screenings and knee replacements. Several years ago, health economist and Princeton professor Uwe Reinhardt called the pricing of hospital services in the U.S. "chaos behind a veil of secrecy," and things haven't gotten any better since the passage of health reform.

In the end, my wife and I were forced to make an educated guess about how much money to put away for her labor and delivery. We're both family doctors, by the way, and between the two of us have personally delivered hundreds of babies. And if we can't figure out how much it costs to have a baby, good luck to all of the other women who will be giving birth in the U.S. this year.

7 comments:

  1. Best of luck with the new arrival! You have highlighted how crazy our system is.

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  2. Some days I envy your system of healthcare, other days, not so much...

    Good luck with the delivery and with your new baby!

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  3. This is a great blog post, Kenny, and just points to the fact that we need more cost and quality transparency in the system. Insurance companies are starting to provide some of this info based on the data they have available, but these cost estimators are still in their infancy. I work for one such insurance company that has given it a shot and would love to get your input, suggestions, feedback on our solution. If interested, pls look me up on twitter @TorbenSNielsen or LinkedIn.

    Thx and best of luck with the new arrival!

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  4. Great post and congrats on your soon to be addition!

    Stephen

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  5. Ahh how lucky I feel to be an Australian where the government cares about our health no matter the cost. Hope the baby arrived safely and there were no unexpected pricetags along with it!

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  6. So... how much did you put away!?! I am in the same boat and wondering the same thing.

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  7. When I had my son 3 1/2 years ago, I had just arrived to DC, I had an international insurance that covered $5000, and no insurance would take me since it was considered a pre-existing condition. I had to go to all the hospitals (I went to Sibley, GW, Washington Hospital Center and Virginia Hospital Center) Nobody could give information on exact costs, However in VHC I found somebody really helpful, She actually said that if I prepaid I could get my delivery for $4000 no matter if it ended up in C-section or not, it included 2 nights in the hospital, any extra night was $1500. If I opted for the epidural I had to pay $1000 in advance as well, if you decide to use it and its not pre-payed it can go up to $4500. When I got my final bill for an extremely hard and long delivery it was for about $30,000. But I didn't have to pay anything since I had the pre-payed packet. It was a long ride for us, but since then I have learned that most hospitals offer the same options.
    I also negotiated with my OBGYN as I payed cash and her bill for the whole 7 months (sonograms and tests included) was $4000 (covered by my International Insurance)
    So the total costs for me was around $8000, a lot less than the $37000 (Hospital + Prenatal care)

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