What does it cost to have a baby in the United States? This question has always vexed me. I’ve tried unsuccessfully to prospectively price deliveries for family and friends over the years. After insurance, deliveries can range from a few hundred dollars to a couple of thousand. If you’re underinsured or have a more complex birth, it can cost more than $10,000 out of pocket. With nearly 3.6 million babies born in 2023 in the U.S., you’d think we as a country would have this one figured out. We don’t.
Thanks to the Lower Costs, More Transparency Act and the No Surprises Act, which incentivize hospitals and insurance companies to compete on pricing simplicity for these common shoppable services, estimates are getting easier. But it’s still tricky business.
In fact, I’m the CEO of a health care price transparency company, and when my family welcomed our baby into the world in June, I tried to keep a running tally — partially out of professional curiosity, and partially to keep myself awake. Even I couldn’t figure out what our final total would be.
We checked my wife into the hospital at 2 a.m. as she experienced frequent, painful contractions. Her first step laboring in the hospital was to sit in a chair and fill out paperwork for 10 minutes, confirm her insurance, and blindly sign an electronic screen agreeing to pay for anything and everything billed. In normal circumstances, she might have looked at me and asked “Should I sign it?” But this time, she (very reasonably) signed without a glance.
The clinical side of labor then began. We have wonderful things to say about Scripps Mercy Hospital. (They even sent a handwritten congratulations card with all the nurses we saw during the stay—that is class!) Our baby was born by dinner time. I again confirmed that I am, in fact, a crier during life’s best moments. My wife’s first emotion was relief, followed by a flood of love.
When everyone was settled, I started to do the math.
- I knew that my wife had just experienced what medical coders would call an MSDRG 807, vaginal delivery without complications. I also knew from insider industry knowledge that the factors generally driving the price of delivery for commercial insurance are:
- Was the delivery a C-section (typically billed as a four-day case rate) or a vaginal delivery (typically billed as a two-day case rate)?
- Would the baby be admitted to the NICU?
- I used the Turquoise price transparency data to search our Cigna PPO plan for MSDRG 807 at Scripps Mercy. I looked at our plan documents and learned we’d owe up to the deductible and then a 20% coinsurance off the negotiated rate (the agreed-upon rate my insurer would pay our provider for this service) of $7,601. This is based on what I could find in my plan’s member portal. Unfortunately, my summary plan docs led to a dead link so I had to make some best guesses.
- We have enough savings not to sweat a roughly $1,000 variation in the cost of care the way many families in the U.S. would in this situation.
Knowing how all of this worked helped us navigate areas that could have caused a lot of stress for other families, especially those worried about paying the bill. For instance, we had this exchange when a nurse arrived to give my wife ibuprofen.
My wife: “I can tell they scan everything they give us. We’re probably overpaying so much for this ibuprofen.”
Me: “Since Cigna negotiates with Scripps at a vaginal delivery case rate, all charges roll up into the flat fee. So you don’t have to worry. Order all the room service you want.”
My wife: “Oh. Why don’t they tell you that?”
Me: *Shakes head, looks out the window, and thinks about price transparency.*
On the final day of our stay, after two blissful nights in the hospital (the first night didn’t count since we were admitted at 2 am only under observation, which we’ll set aside for the advanced-level billing course), we were set for discharge. I had prepped the car seat and we were eager to show our baby his new home.
Then OB made rounds and asked my wife how she was feeling. She said she was feeling well, but woke up with a bit of a headache. The OB said that the headache could be a sign of something more worrying, though she wasn’t concerned because my wife’s blood pressure was normal. She said that my wife could either go home and monitor her blood pressure or stay another night. The situation was presented to us in the same way that a hotel manager might offer to comp an extra night at the end of your stay free of charge.
But since I knew Cigna typically negotiates at two-day delivery case rates, the extra day would likely bring an additional per diem rate, typically about $1,500 – $2,500. At our 20% coinsurance, this was about a $300-$400 decision (plus any additional professional fees). Other families would owe much more with different types of insurance.
We had an at-home blood pressure monitor already, one that cost $40 from CVS.
We went home, my wife took Tylenol, and her headache subsided within a couple of hours.
To date, we have received most of the bills we expected. When we left the hospital, I thought a few weeks would pass before we’d receive a facility bill negotiated down to $7,601, multiplied by 20% to our cost share, and we’d get a few professional and lab bills from other charges during the stay.
I was mostly right. But when those first bills arrived, the one aspect I wasn’t able to nail down turned out to be one of the most significant financial decisions of this experience: the epidural. I knew this would be costly but was surprised by exactly how much. It represented about a third of the cost of the total stay.
To date, we have received most of the bills we expected. When we left the hospital, I thought a few weeks would pass before we’d receive a facility bill negotiated down to $7,601, multiplied by 20% to our cost share, and we’d get a few professional and lab bills from other charges during the stay.
I was mostly right. But when those first bills arrived, the one aspect I wasn’t able to nail down turned out to be one of the most significant financial decisions of this experience: the epidural. I knew this would be costly but was surprised by exactly how much. It represented about a third of the cost of the total stay, with $6,200 billed and a Cigna-negotiated rate of $2,680. We owed 20% at $536. This is a couple hundred dollars more than I anticipated.
Another challenge: My wife started having contractions and went to the labor and delivery ward at 10 a.m. We were there for 30 minutes for a basic evaluation, and they sent her home. That’s 16 hours before we checked in at 2 a.m. the following day. The hospital billing system messed up and billed us an additional inpatient day, mixing up those two accounts. So we were billed an additional day after all, negotiated rate of around $1,600, for which we owe 20% (about $320). Since I know what happened and can fix this with the hospital, we’ll get these charges wiped. But I’d guess someone less savvy would just pony up and pay.
So in all, we currently owe about $600 more than we thought we would but will get this down to $300 more than we thought we would.
Let’s compare this to the experience of paying for a flight. Right now, you hop on an airline website, enter your trip dates, choose your flight, pay, take your trip, and move on. If airline billing worked like healthcare billing, you’d choose your flight, take your flight, and months later, receive individual bills from all pilots, the flight attendants, a bill from the airline, and maybe even one from the person who transported your bag into and out of the plane (let’s not even think about the pretzels!). All of these bills would arrive separately, with little to no explanation as to why they cost what they do but with ample pressure to pay them on time and in full. Wouldn’t that be crazy? And yet.
About two-thirds of births in the United States are healthy, uncomplicated vaginal deliveries. The remainder, generally, are C-Sections without major complications. There is a long tail of complex deliveries and NICU stays that can forever alter a family’s financial health. The level of complexity with which all of these births are billed is exactly the same.
I firmly believe the primary goal of price transparency legislation is to drastically improve the patient’s financial experience. But we’re early in the consumer healthcare journey. A lot of great progress is happening behind the scenes that has yet to directly impact the consumer.
Childbirth perfectly illustrates where we’re at — even a price transparency CEO can’t correctly guess within $1,000 the total of his family’s stay.
However, thanks to the much-needed updates in hospital price transparency regulations, the math for families welcoming babies is getting simpler. Soon, perhaps, families that want to save money may be able to plan their pre-visit, bedside, and post-visit experiences much like they book a stay on Booking.com. The financial experience that 3.6 million families a year deserve is getting closer.
Chris Severn is CEO and co-founder of Turquoise Health.
Sept. 11, 2024: This piece was updated to include more information about the author’s wife’s birth-related medical bills.
