Cost of Having a Baby?

Developmental Blogology. 2013 December 30

Cost of Having a Baby?

Abstract:
Careful planning, responsible behavior, and even having insurance may not save you from large medical bills associated with having a child (or any medical event for that matter!).  Insurance is there for when your optimistic hopes that nothing bad will happen (it'll never happen to me!) is overwhelmed by reality (oh, so that happened!).

Recent changes allowing enrollment in healthcare exchanges may not really provide the uninsured with numerous ways of saving money (at least for our family as an example), and we found the great value my employer's group plan offers after the fact.

Introduction:
Having health insurance is not only a good idea, it's the law.  Or so I've heard from www.Healthcare.gov.  

The average costs of having a child in the United States in 2012 varied from $9,775 for a conventional delivery to $15,041 for a caesarean delivery  according to a recent article in the New York Times.  This is the actual payments agreed to by the insurance companies, not the list price given to the uninsured.

I've been insured most of my life (first through my parent's policy, then through an employer, then through a university program, UNINSURED, then through employers again), and I've always known the risks of being uninsured, but never has it been so clear as it is now, looking at the medical bills for the delivery of our child and realizing just how financially devastating it could have been if we had chosen the wrong plan - or had been uninsured.  

Methods:
When I switched jobs, my wife and I had to decide between a higher deductible HMO plan, and a higher cost PPO plan.  We chose the PPO plan to rest easy in the knowledge that we would have a wider selection of doctors, no deductibles and minimal costs during a time in which we would already be stressed with diapers and sleeplessness. Little did we know how valuable that choice that would be (and how lucky we were to have the choice and the ability to afford insurance at all!).

My wife made a point of taking her prenatal vitamins, eating right, making all of her prenatal doctor's appointments, and exercising whenever possible, and she stayed in excellent health, despite some rather unpleasant morning sickness in the first trimester.  Everything looked normal and mom and baby were doing excellent the whole way through the pregnancy.  When labor started, everything progressed normally, and then we saw our baby boy for the first time!

Results:
When our son was born, I was amazed, seeing him for the first time.  I was so happy to be able to hold my son in my arms, but quickly the happiness turned to concern as the we noticed he wasn't breathing normally. Rather than the normal cries of a newborn, he made a few weak gurgles, and his skin turned blue. He had aspirated some meconium in utero and was having trouble breathing.  My wife was only able to hold him for a few seconds before he was taken away to be put on Continuous Positive Airway Pressure (CPAP).

Another hospital's Neonatal Intensive Care Unit (NICU)  sent a team to intubate our son and transfer him to their facility.  Once in the care of the NICU's talented staff, our son made a rapid recovery, and within a few days we were able to take him home. The stress of spending our son's first night away from him (bad weather, and hospital policy preventing my wife's early discharge kept us in place), and the concern about his well being in the NICU over the next few days was gradually replaced with relief as he recovered faster than expected.

Within a few days of his discharge, we started checking the medical bills, and the total quickly exceeded $100,000.  This was not just the amount billed, which insurance companies negotiate through deals with the hospital, but the amount the insurance company was paying for services rendered.  

If we were near the poverty line and/or uninsured, we might have qualified for Medicaid - or state programs that might have covered a portion of our medical bills along with the charity care that hospitals offer to those who can least afford their services.  In our case, our insurance picked up the expenses, leaving us with minimal co-pays, and room charges for my wife and son's time in the hospital. If we were on any number of high deductible-limited coverage plans, or if we were unlucky enough to be unemployed/uninsured temporarily during the birth of our son, we could have easily ended up with tens or hundreds of thousands of dollars in bills.  

While we are not in poverty, the sudden addition of "mortgage payment" for a decade or more in medical bill repayment would've easily pushed us towards bankruptcy - a situation shared by more than 60% of Americans filing for bankruptcy, many who have insurance.  

Since I'd like this to be educational, I went to www.healthcare.gov and looked at the price of un-subsidized plans available to us as a family of 3 - Two Adults, One Child - no catastrophy plans (I'm too old!), and no subsidy, because I'm too successful (ha!), and figured roughly what it would have cost us if we had our son covered by one of these plans in 2014.

Geisinger Plans (comparable to our existing plan)
Plan Source	Level	Name	Premium		Deductible	Out of Pocket Max	Copayments		Baby Cost
			Monthly	Yearly			Primary	Specialist
Marketplace Plans	Bronze	Marketplace Solutions 13	$477	$5,724	$12,000	$12,500	No charge, after deductible		$17,724
		Marketplace Solutions 12	$478	$5,736	$8,000	$12,700	30% Coinsurance, after deductible		$18,436
	Silver	Marketplace Solutions 10	$498	$5,976	$7,000	$7,500	No Charge, after deductible		$12,976
		Marketplace Extra 3	$506	$6,072	$4,000	$12,000	$10	$50	$10,072
	Gold	Marketplace Extra 2	$553	$6,636	$1,000	$10,000	$10	$40	$7,636
		Marketplace Solutions 5	$572	$6,864	$2,700	$5,000	20% Coinsurance, after deductible		$11,864
Employer Plan	Existing	Geisinger Choice PPO	$241	$2892*	$0		$20	$20	$3,133
		PPO Employer Cost
Uninsured, at our income level						∞			$100,000+
NOTE: Plan comparison is of actual plans on Healthcare.gov for 2014, that would not have been available to us at the time our son was born (2013). Theoretical costs include premiums paid, deductible, and any co-insurance payments. This does not account for prenatal visit co-pays (covered deductible free in all plans, thanks to Obamacare), and ignores if any out-of-network providers were used, because in our case none were, and of course, no data is available to reliably estimate what costs would've been if we used out of network providers. The epidural my wife received may not have been covered by all plans, which could add $1000+. In plans with co-insurance, the total costs would've hit the out-of-pocket maximum. *Employer contributions are not considered, but will be updated once I get my 2013-W2 showing what my employer paid, so we have an accurate idea of the total cost.

Even with the optimal plan on the exchange, we would've had to pay $7,636 for the birth of our son.  Granted, this money would have also insured us against any other health problems, as it would have paid the premium for the year, and maxed out our out-of-pocket deductible for any other qualifying medical events between the beginning of December and year end.  The other factor is that choosing the "right" plan retrospectively makes the opportunity of being "over insured" impossible. Obviously, the best deal for us is the employer provided plan which is subsidized by my employer (I'll update this once I get my W2 and can calculate how much my employer paid), but not everyone has such a generous employee benefit package.


Conclusions:
First, we'd like to thank Mount Nittany Medical Center's Labor and Delivery, and  Respiratory Therapy; Geisinger Gray's Woods Pediatrics; and the Janet Weis Children's Hospital NICU at Geisinger Medical center for their professional and knowledgeable staffs' care of our son.  His quick recovery would not have been possible without them.  Having him home for Christmas was the best present we could have ever hoped for.

Second, get medical coverage, or review your medical insurance coverage.  Even if you're in good health, follow all your doctor's recommendations, and use facilities covered by your plan, you can rack up significant medical expenses through no fault of your own - you may be transferred to a facility or treated by a specialist who is not covered (and this may be beyond your control!).  Even with insurance (the plans illustrated above), you could end up with monthly payments for your outstanding balance between $64 and $154 for 10 years, or more than $800 a month for a decade without insurance coverage!  Clearly having insurance is better than not (unless you' hope to have the debt discharged in bankruptcy, or rely on charity care), and in our case, having employer group insurance saved us a fortune.  

The differences between exchange based plans were pretty minimal given one major medical event in a decade, but would still require the policy out-of-pocket maximum be available (emergency fund, anyone?)   Taking a look at the long term consequences of a single Out of Pocket Maximum claim in a decade, with no future costs beyond the premium,  the difference between the optimal and most costly plan on the exchange is less than $3000 (assuming no increase in premiums, as if that could possibly happen), or less than $23 a month.  Assuming the same increase in premiums seen in 2013 (the lowest in a decade), the cost difference over a decade  is just over $1000, or $10.32 a month.  Although the differences aren't that great, nearly $70,000 spent over a decade for a family of 3 is no small amount of money in any budget.  

Cost of Health Insurance Over 10 Years With One Out of Pocket Max Claim During Year 1 (No Cost Increases)
Type	Name	Total Cost										Annualized Cost
		Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Optimal	Marketplace Extra 2	$7,636	$14,272	$20,908	$27,544	$34,180	$40,816	$47,452	$54,088	$60,724	$67,360	$6,736
Most Costly	Marketplace Solutions 12	$18,436	$24,172	$29,908	$35,644	$41,380	$47,116	$52,852	$58,588	$64,324	$70,060	$7,006
Cost of Health Insurance Over 10 Years With One Out of Pocket Max Claim During Year 1 (3.3% increase, as in 2013, the lowest in a decade)
Type	Name	Total Cost										Annualized Cost
		Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Optimal	Marketplace Extra 2	$7,636	$14,491	$21,572	$28,887	$36,443	$44,249	$52,312	$60,641	$69,346	$78,134	$7,813
Most Costly	Marketplace Solutions 12	$18,436	$24,361	$30,482	$36,805	$43,336	$50,083	$57,053	$64,253	$71,690	$79,373	$7,937

We were lucky in that our (sizable) monthly premiums, along with my employer's (sizable) contribution provided coverage for care that saved our son's life and gave us the ability to continue on with our life as a family, saving for his education, our retirement, and our goal to buy our own home, rather than spending the next decade (or more) paying medical bills.  We'll continue being productive, employed, tax paying citizens, because of our healthcare plan, and I'd gladly pay the amount I'm paying in insurance premiums (including the "compensation" my employer is contributing towards our plan) in taxes instead, to ensure that everyone receives routine and necessary care without the fear of financial ruin.  

Meta Conclusions:
Trying to use Blogger to insert tables SUCKS.  I tried adding them in a number of different ways, and ended up manually creating the tables in notepad, only to have them become unusable after switching from the "HTML" mode back to "Normal".  Until they get this sorted out, I've resorted to using some handcoding (boy, it's been a long time since I've done this!) and doing some quick WYSIWYG editing in KompoZer.