Childbirth Crapshoot: Hospital Charges Vary by a Factor of 10

Wednesday, January 22, 2014

Expectant parents shouldn’t forget to ask about the cost of delivery, considering they could pay as little as $3,296 or as much as $37,227 for a non-complicated vaginal birth.

Researchers at the University of California, San Francisco struggled to tell a coherent story in their report about the state of childbirth in California hospitals because, they wrote, “Unlike other industries, the way health care is priced and paid for is notoriously opaque, making it difficult for patients to act as educated, price-comparing consumers.”

Nonetheless, after looking at 110,000 cases in 2011 of women with private health insurance, they concluded that the “staggering difference” in prices, “even for an uncomplicated pregnancy,” was inexplicable. The study also found a wide disparity in costs for cesarean sections, with prices ranging from $8,312 to $70,908.

Researchers considered patient circumstances, hospital characteristics and market factors, but attributed just 35% of cost differences to them.

“The market doesn’t work and the system doesn’t regulate it, so hospitals can charge what they want,” lead author and associate professor at the UCSF School of Medicine Renee Hsia told Bloomberg. “The scary thing is, as patients, you don’t have this information.”

“Charges appear to be nearly random, and are either based on outdated historical methods or set using idiosyncratic proprietary formulas,” the report states at the outset. In the end, it chalked it up to “unobservable hospital characteristics.”

A national study (pdf) by Truven Health Analytics showed that average out-of-pocket payments for all maternal care covered by commercial insurers increased nearly fourfold from 2004 to 2010 for both vaginal and cesarean births. More than half a million women give birth at California hospitals annually.

Medical industry critics of the UC San Francisco study say it ignored one crucial factor: it looked at prices before insurance companies discount them. Ann McLeod, senior vice president of health policy for the California Hospital Association, told Bloomberg that an accurate picture of hospital costs can’t be realized without those discounted numbers—and they aren’t public information.

Not to be deterred, the researchers analyzed hospital receipts and calculated that, on average, insurers discount costs by 37%.

At a time when politicians are hoping that the Affordable Care Act (Obamacare) will help rein in rising medical costs, critics point to studies like this to assert that not enough can be accomplished without transparency on medical pricing. Americans spent $2.7 trillion on healthcare in 2011, around 17% of gross domestic product and despite being slowed by Obamacare is still headed up at a rapid pace.

–Ken Broder


To Learn More:

Baby Birth Costs Vary 10-Fold in Hospitals, Study Finds (by Caroline Chen, Bloomberg)

California Hospitals Charge $3,000 to $37,000 for Childbirth, Study Says (by Chad Terhune, Los Angeles Times)

How Much Does it Cost to Have a Baby in a Hospital? (by Elizabeth Fernandez, University of California, San Francisco)

Analysis of Variation in Charges and Prices Paid for Vaginal and Caesarean Section Births: A Cross-Sectional Study (by Renee Y. Hsia, Yaa Akosa Antwi and Ellerie Weber, University of California, San Francisco)

The Cost of Having a Baby in the United States (Truven Health Analytics) (pdf)

Leave a comment