“British royal born in fanciest ward:
$15000. Average US birth: billed $30,000; paid $18,000. What’s wrong here?” tweeted the New York Times’ Elisabeth Rosenthal.
In her report in the Times, Rosenthal took a lengthy look at the cost of having a baby in the United States. “The average total price charged for pregnancy and newborn care was about $30,000 for a vaginal delivery and $50,000 for a C-section,” Rosenthal reported.
As The Washington Post’s Sarah Kliff points out, “The $15,000 figure comes from estimates of how much one would have to pay to deliver in the Lindo Wing of St. Mary’s Hospital, where the Duchess of Cambridge gave birth to a son on Monday. This is expensive for the United Kingdom, but, here in the United States, it would actually be a pretty great deal!”
According to an analysis by Truven Health Analytics, about 4 million women give birth each year in the United States. “Although childbirth is a common occurrence that has great impact on the healthcare system, our knowledge regarding the cost of childbirth is limited.” The study looked at the costs associated with women who gave birth in 2010.
In her report, Rosenthal wrote: “Childbirth in the United States is uniquely expensive, and maternity and newborn care constitute the single biggest category of hospital payouts for most commercial insurers and state Medicaid programs. The cumulative costs of approximately four million annual births is well over $50 billion.”
So, why is having a baby so expensive?
“No item is too small,” Rosenthal explained. “Charges that 20 years ago were lumped together and covered under the general hospital fee are now broken out, leading to more bills and inflated costs. There are separate fees for the delivery room, the birthing tub and each night in a semiprivate hospital room, typically thousands of dollars. Even removing the placenta can be coded as a separate charge.”
Color of Money Question
Let’s continue this conversation. I’ll ask you the same question Rosenthal asked of her readers: What aspects of maternity care or its costs were unexpected for you as parents or after reading the Times story? Send your responses to colorofmoney@washpost.com. Put “Prince George” in the subject line and include your full name, city and state.
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Calculating College Cost
Once the baby is here, you have to figure out how to pay to educate the kid. So, how much should families save for their kid’s college education?
Joe Hurley, a college savings expert, says parents should contribute $250 a month to a child’s 529 plan, reports Beth Pinsker for Reuters.
Our family’s choice to save in a 529 plan is paying for my daughter to attend college starting in the fall.
There are two types of 529 plans: prepaid tuition plans and savings plans. A prepaid plan allows you to pay for tuition in advance. The more popular savings plan allows you to invest in a tax-deferred investment account. Money withdrawn from a 529 investment account is free from federal tax (and in most cases free from state and local taxes, as well) when used for qualifying college costs. Additionally, many states offer tax deductions for residents who make contributions to a 529 plan.
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