Without question, this has been the most expensive year for healthcare that we've ever had. Since all this pre-natal care began right at the start of the year, it actually gives us a great year-to-date look, with two months left to go. So what have we seen so far?
| Patient | Charges | Insurance | Co-pay | %Allowed | Paid |
| Cherry | $11,249.36 | $4,993.40 | $ 65.00 | 44.97% | $5,058.40 |
| Spencer | $ 1,070.00 | $ 319.70 | $200.00 | 48.57% | $ 519.70 |
| Xavier | $ 1,408.10 | $ 736.72 | $100.00 | 59.42% | $ 836.72 |
| TOTAL | $13,727.46 | $6,049.82 | $365.00 | 46.73% | $6,414.82 |
All told, pre-natal care, birth and the first two weeks of newborn care cost $5,895.12. The cost was higher because we had a more than a handful of ultrasounds, but lower because we gave birth at a birth center, not a hospital.
How does that compare? Based on a 2004 study of 43,000 births, we're actually on the low end thanks to our natural childbirthing ways (and despite our sonogram-happy OBs at the start, who we've discovered seem to diagnose a lot of those rare bicornuate uteruses). Nationally, the 9 months of prenatal care, the birth and 3 months of newborn care average $7,737 for a vaginal delivery and about $11,000 for C-sections. Throw in 5 years of medical cost inflation and we look even better.
Clearly, we're grateful to have good insurance. The submitted charges were astronomical, and the negotiated insurance rate cut those down to by over 50% on average. My favorite example though was a lab test, which made me laugh when I saw the EOB: They charged $109. Insurance paid $5.50. Certainly health care providers inflate their charges deliberately because they know insurers are going to negotiate them down. This makes it all the more unfair for those without insurance however, who can get stuck with a ridiculous bill. Consider, if we had paid all submitted charges out of pocket, our childbirth costs would be running upwards of $13,000.
But fortunately, we didn't and so all things considered we got our money's worth, right? Let's take a closer look:
| Total | Employer | Self | |
| Premiums | $10,391.16 | $7,793.50 | $2,597.66 |
| Claims Paid | $6,049.82 | $ - | $ 365.00 |
| Insurance Revenue | $ 4,341.34 | $ - | $ - |
Not counting Zipcar for those many trips out to the birth center, we actually paid very little out of pocket for birth-related care. Indeed, over half our co-pay amount for the year was for my two ENT visits, which were (again, ridiculously) categorized as "surgery". But we do pay 25% of the premiums, which adds up to a pretty penny, about $2,600 over the year. (Or 260,000 pennies.)
But BlueCross isn't hurting either: Even with another well-baby visit or two, they're still $4,000 ahead for the year off of us. You'd think that with margins like that (and the C-section rate unnecessarily moving north of 32%) they'd be encouraging tons of people toward birth centers and home births! What an easy way to fatten their bottom line!
Ahh, not so fast. As a labor & delivery nurse recently reminded me: "Spencer, you're forgetting who is in charge of insurance companies: doctors." The medical model of childbirth exploded after WWII alongside the expansion in health insurance coverage, and they have to keep their own in business too. Most of us would call it short-sighted to not pay for the cheap stuff, but cover the expensive. But it happens all over the medical world because lined up in front of the buffet of whatever the doctor orders, I have no incentive to question charges. After all, I don't see them unless I actually read through my EOBs, and most of my costs are already sunk. The only reason I even know that my salary is $8,000 lower than it might otherwise be due to the health benefit is because my employer actually clearly outlines how much they pay for me. (And not just for health insurance, but payroll taxes and retirement too, which add up to quite a substantial sum.)
For all the good that insurance and modern medicine have done, they've also created an industry almost wholly unaccountable to market forces. It's bad economics, but for those of us lucky enough to still have decent coverage, it's easy to forget or overlook how much it's truly costing us, and that in some ways, it's a curse.
My neighborhood may teem with conspicuous consumption, but I'm quite happy with my $6,000 baby. After all, he's priceless. (And he wasn't a flea market find nor a blue light special at K-Mart!)
Amen, my friend. Amen.
ReplyDeleteJared and I have been discussing recently if it is really worth it to have health insurance for the little stuff (not that pregnancy and birth fall into the 'little' category). The main reason? If you don't have insurance, you often get a discount. I asked our pediatrician's office last time we were in what their policy is and was told that 'self-pay' people get a 20% discount on everything, with various items at even more savings. For example, the flu shot that they charge my insurance $37 for can be purchased by the uninsured for $11.55 (I was told this is because the government already subsidizes these). Anyway, we haven't crunched the numbers yet like you have, so we don't know which way would prove less expensive, but it is food for thought.
ReplyDeleteAnd, it is a good idea to read those EOB's. Since we actually had to pay for Ahsha's birth this time I did take a close look at what they charged us and found a $100+ error that I called them on. Glad I looked!
While some doctors will give discounts to the uninsured or those with a high deductibles (Me--our chiropractor gave us the much lower 'student' rate), often it's the reverse. Just having some insurance means we get the insurance 'contracted' rate which is maybe $100 for a doctor visit instead of $130 that an uninsured would pay. Even though we spend WAY less on medical each year than would fill our $5600 deductable insurance (that we pay ~3000/yr for), I still can't imagine going without it as 1 medical emergency could easily make us loose all that we have. --Carrie
ReplyDeleteYeah, I'd still want to have major medical coverage. That could definitely be scary.
ReplyDeleteTheoretically, protection from catastrophic costs through pooled risk is the function of most any insurance. That our health insurance has become “comprehensive”, covering all costs, not just catastrophic ones, has greatly complicated the situation.
ReplyDeleteI fight this battle myself between two schools of thought:
-High-deductible plans, like 401(k)s, were created with the intention of shifting financial risk from the employer to the employee, and incidentally, have had the effect of allowing employers to escape offering otherwise more costly benefits. While touted as offering more flexibility to the consumer, there’s effectively a much higher likelihood that they will be worse off in the future than under a traditional scheme.
-At the same time, it’s more market-based and introduces incentives for people to make better health decisions, because they’re more directly bearing the costs. In the end, that is one of the critical ways to keep down health care inflation. Also, it potentially allows the young and healthy, and those who without employer-based coverage to afford coverage and makes them better off (at least as long as they stay healthy).
While in my heart I know that HDHPs should logically be part of the solution to rampant health care inflation, I wasn’t about to voluntarily sign up to take one for the team.
At the beginning of the year, Cherry’s company switched to a high-deductible plan, with little notice. Knowing that we were about to start a huge sequence of prenatal care that would cost us a lot of money up front, we quickly switched her to my health care plan (though the grace of a brouhaha between Congress and BlueCross that resulted in Open Season being extended for a month).
Was this a wise decision? We hadn’t yet calculated if our switch paid off, so let’s see:
-Cherry’s company paid the entire premium and would contribute several hundred dollars to a Health Savings Account (HSA) over the course of the year.
-Switching from “Self” to “Self & Family” on my plan would cost us $57.24 more in premiums biweekly, but with much reduced variable costs. $57.24 x 26 = $1,488.24 extra per year.
-Considering that our insurance paid about $6,000 for our maternal care (some of which might have been covered under “preventive” care, though probably not most), we appear to have come out several thousand dollars ahead for making the switch. HDHP’s might be better for society by helping keep down costs, but it would have hurt us.
-Cherry’s employer, a small business, saved thousands by both offering cheaper and inferior coverage which in turn prompted her (and another pregnant employee) to switch to her spouse’s plan.
-The government paid thousands more in premiums for my family plan, as presumably did the employer of the co-worker’s husband. Effectively, the taxpayer (thanks everyone!) and another large business subsidized this small business’s decision to cut their costs.
Is it fair? Is it right? It’s certainly a game.
humm... very interesting honey!
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