A Plea For Change: Health Care Costs

After President Obama came into office, there has been a lot of attention on Health Care Reform. I think medical care costs vary so much between individuals and areas of the country that it’s hard to even know if you are getting ripped off one place or another, or if your insurance is fairly priced. This is a peek at the biggest medical costs in my life; childbirth.

My wife and I have three kids. Our first child was born completely on Medicaid. At the time, I was self-employed and not making enough money to pay for any insurance through a private insurer so we got to take full advantage of this Government provided insurance coverage for low income families. My wife ended up having a C-section due to complications but we never saw a bill.

C-sections cost between $3,000 on the very low end all the way up to $15,000 on the high, all without complications. Any complications added into the mix can really bump the cost up but for this comparison and argument, I will use an average figure of $10,000 for a C-section + prenatal medical visits.

Total Approximate Cost: $10,000

Our second child was born during a time that I was still self-employed but I was making more money and we didn’t qualify for any insurance or assistance. We started saving for the birth as soon as we found out we were pregnant and knew we would be paying out of pocket for the entire delivery. Luckily, we had a great doctor that was experienced with VBAC deliveries (Vaginal Birth After Cesarean) so my wife was able to deliver vaginally without complications. Our overall cost came out to about $6 including OB visits, epidural and hospital stay.

Total Approximate Cost: $6,000

My wife is pregnant now and due in February. This go-around I have a more traditional job with insurance coverage. Our insurance premiums are around $300 a month and we have a deductible of $2000 this year with an 80/20 payment plan after the deductible is met. This year we met the deductible but seeing as the baby will be born next year, our deductible will need to be met again. Next year, due to health care costs on the rise, our deductible is being raised to $3000. My company does offer an HRA or Healthcare Reimburement Account to help pay the deductible which will reimburse $1,000 of our health care costs. Adding premiums (9 months worth, just to get the cost of pregnancy), and our deductible, we are already in about  $4,700. Then if we take the cost of our previous birth, $6,000, and add the 20% we are responsible for after insurance pays 80% of qualifying costs, our total comes to $5,900.

Total Approximate Cost: $5,900

If you look at these numbers, the cost of birth without insurance, and the cost with insurance is almost the same, if insurance considers every bit of the $6,000 as qualifying which isn’t usually the case.

On top of that, when we were negotiating with the hospital concerning the out of pocket delivery of our second child, they told me that the $6,000 was the cost for birth without insurance but if we had insurance, the total billable cost would be $18,000 and that is just for the delivery and hospital stay and didn’t take OB visits into account which made up about $2,500 of the $6,000 total cost.

20% of $18,000 is much different than 20% of $6,000 and that would bump our cost with insurance up to almost $9,000 which brings me to the conclusion that having insurance is more expensive than not having it in the pregnancy scenario and the only reason we have insurance is for catastrophic events.

There is something wrong here and while I don’t believe that insurance should be completely run by a government body, I do think that the medical field needs more stringent regulations on what they can charge. If they are reaming the insurance at every chance they get, just because they can, that cost comes back to us. That causes premiums to rise, insurance companies to be more strict on what qualifies for coverage and in the end completely defeats the purpose of having insurance.

Have you experienced life without insurance? Please share your own experiences in the comments.

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12 People have left comments on this post



» PeteNo Gravatar said: { Nov 23, 2010 - 01:11:51 }

I think part of the problem is that it is so expensive to be a doctor these days because of malpractice insurance/low government program reimbursements/etc that they have to make up the money somewhere – so they do it with the insurance companies and the insured. They reduce the amount owed by non-insured because they know that they are less likely to collect anyway, so they may as well reduce the amount owed – to make it more likely they’ll get something.

We need a lot of changes to health insurance including allowing portable coverage from state to state, tort reform to cap lawsuits (and reduce huge premiums doctors and hospitals have to pay) and a variety of other things. Things are so far gone at this point, i’m not sure there’s an easy answer, however.

At our house we haven’t enjoyed paying the big premiums either, and in some instances it might be cheaper to pay out of pocket for certain procedures. On the other hand, the reason we have insurance is to protect against catastrophic events. It only takes one to put you into bankruptcy. We have had two big events in the past 3 years while we had coverage. One was a completely out of the blue blood clot for my healthy 26 year old wife, who ended up having to spend a month in the hospital – and saw 250k+ in hospital bills. If we were uninsured we would have been in big trouble. The other was when we had our son this year. Everything went fine, but because my wife had a fever during labor our son had to go into the infant ICU. Apparently that isn’t cheap because we got bills in the mail before insurance showing over $15,000 worth of care in the ICU alone. Thankfully again we were covered.

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Jesse MichelsenNo Gravatar Reply:

Hey Pete, thanks for your insight. I’m think you’re right, the only reason to have insurance is for catastrophic cases.

While, like you, I think there is a ton of change needed there from malpractice insurance to regulation across the board, you’re probably right again in thinking it’s almost too far gone…

On the plus side, a friend of mine who leaves in Ecuador had a serious health problem and practically had to steal the blood she needed for a transfusion to save her life. Our system isn’t perfect, but elsewhere they have it worse and I sometimes forget how good we have it.

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» EvanNo Gravatar said: { Nov 23, 2010 - 07:11:43 }

I don’t pretend to know the answer, but the government hasn’t run *any* program efficiently, so why would this be different?

Congrats on the new upcoming addition! I have about 3 weeks until mine will arrive

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Jesse MichelsenNo Gravatar Reply:

I’m thinking more along the lines of regulate vs run. They really shouldn’t have their hands that deep in the medical system, but not regulating it at all leaves too many doors open for crooked practices and billing.

Congrats on yours by the way! I hope all goes well. Is this your first?

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» YanaNo Gravatar said: { Nov 24, 2010 - 12:11:55 }

We are experiencing life without medical insurance, and have been since around 2000. We don’t want medical insurance or to be a part of that scam, and as far as paying for medical care, we regret every time we have done so. Nowadays, most doctors do not even want a self-paying customer and will not accept them – at least in our area. We do not at all need tort reform. There needs to be much more accountability, not less.

We need price controls in medical care and diagnostics, among many other things. Health insurance should be abolished, as health is not something that should be insured. I have a couple of friends who have insurance. One of them, an elderly lady, had a colonoscopy because she became severely anemic through blood loss. Colonoscopies cost about $1,500 in these parts. Her insurance paid for the procedure, but a month later the doctor suggested he perform it again in case he missed something. She refused, as it is not a pleasant or easy procedure. She needs blood transfusions at least every 6 weeks, but is denied them for a month or so longer every time. She is still thankful that insurance pays most of her costs when they allow the care at all, thinking that it is a good thing. The other friend told me that she was having trouble with a treatment, but is on a new one that costs thousands of dollars a month – all covered by insurance. What I am trying to say is that health insurance is a lottery. When you go to get care with a medical provider, you sign a form stating that YOU and not the insurance company are responsible for all charges. Health insurance companies do not have to pay claims, and when they do, you have won the lottery. But their CEOs win the lottery continuously, and that is fully guaranteed, unlike care for the insured.

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Jesse MichelsenNo Gravatar Reply:

Yana, you really need to start a blog. You always have such great insight (here and elsewhere) and have obviously a ton of experience around here, I’d certainly subscribe :)

I agree about accountability and price control. I understand that medical school is costly but the doctors that are crooked overcharge us and the insurance to pad their pockets, and those that are straight are the ones stuck paying their school loans for ten years and struggling to make a living with a medical degree. Either way, the honest folks suffer without some kind of regulation.

ugh, I guess only time will tell what will happen

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» harvestwagesNo Gravatar said: { Nov 26, 2010 - 01:11:34 }

Hey,
It’s been long i haven’t stop by.
Like this post and think medical care cost just reflects the financial position of the country. It’s very normal.

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Jesse MichelsenNo Gravatar Reply:

Harvest, it may be normal, but that doesn’t make it right.

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» ctreitNo Gravatar said: { Nov 30, 2010 - 10:11:09 }

I agree with you. Pricing for health care is very obscure. When our youngest was born, my wife needed a c-section and the little fellow ended up in the NICU (newborn intensive care unit) for a week. The total bill came to some $42,000! We would have had to pay that much without insurance. Can you imagine? When we got the statement from the insurance company, there was an adjustment (for what?) of $22,000. The insurance company ended up paying the hospital $20,000 for the exact same service that would have cost me $42,000. How much sense does that make? I wonder if a government run insurance scheme could be any more screwed up.

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Jesse MichelsenNo Gravatar Reply:

ctreit, ya I just don’t get it. They can adjust for any reason they like, up or down! Why aren’t they held accountable for their adjustments? Why can they charge a completely different amount for the same procedure between insurance companies and patients? I just don’t get it.

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» YanaNo Gravatar said: { Nov 30, 2010 - 05:11:09 }

Thanks, Jesse. I used to start blogs all the time. I just don’t have the discipline to keep at it ;)

Even doctors that have integrity overcharge, because they charge what is the local standard. It isn’t what the market will bear, though. It would be good if it *were* what the market will bear, but that isn’t possible with a middleman that has a voracious appetite.

Yes, time will tell. It’s just too bad that so many people aren’t guaranteed the time to see real reform.

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Jesse MichelsenNo Gravatar Reply:

Thank you for sticking around here then ;) even without a blog, you do a great job helping others learn from your experience.

I love it, “middleman that has a voracious appetite” that’s it exactly!

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