How Much Does It Cost to Have a Baby in California?

(Shingo/Flickr)

Did this baby’s hospital charge $3,300 or $33,000 for delivery — or somewhere in between? (Shingo/Flickr)

The most common reason for hospitalization in the United States is childbirth. A new study published Thursday adds to the depth of research on cost variation in the American medical system.

In the study, researchers at U.C. San Francisco looked at 110,000 uncomplicated births across California and found that hospital charges for a vaginal delivery ranged from $3,296 to $37,227 and for a caesarian section the range was $8,312 to $70,908.

For health policy researchers, this is not a big surprise, said lead author Dr. Renee Hsia, an associate professor of emergency medicine at UCSF, but “most people that aren’t familiar with health care variation would be surprised and distressed.”

Hsia’s team looked at many variables that could account for variation — things like how sick patients might be or cost of living in one area versus another. “Even after controlling for patient, hospital and market characteristics, we found significant variation,” Hsia said.

In the study, published in BMJ Open, researchers concluded that they could only account for about one-third of the variation in charges. “This implies,” the authors write, “that the variation is a result of either (1) unobservable hospital characteristics or (2) pure noise.”

Before we go any further, let’s get some terms straight. Few hospitals are paid what they “charge.” If the patient has insurance, the insurer pays whatever rate it negotiated with the hospital for the procedure. But if you’re uninsured, Hsia says, you are in a tough spot. Even with the implementation of the Affordable Care Act, lack of health insurance is a continuing problem.

“We still have 30 million uninsured who will see the real bill and who will face the real charges of that bill,” Hsia said. She acknowledged that some of them may get discounts, but added “50 percent of a ridiculous amount is still a ridiculous amount” of money.

Jan Emerson-Shea of the California Hospital Association took issue with the study as a whole and the point about the uninsured in particular. She pointed to a California law that requires hospitals to provide either free or discounted care to many uninsured patients.

“If you’re uninsured, state law prohibits you from being billed on charges, assuming you fall within income guidelines,” Emerson-Shea said. “In most cases, patients would fall into an income category that would qualify them for free care or a discounted amount.”

In an email Hsia called the law a “great effort and important Act” but said it does not solve everyone’s problems of high hospital bills. In her email she noted two points in particular:

1) It only applies to those who are “financially qualified.” You have to make under 350% of the federal poverty level to qualify.  So for a single person who makes more than $40,000, if you get a hospital bill of $30,000, you are not going to get a discount.
2) There is no specific language stating what discount the hospitals must provide.

But one thing Emerson-Shea and Hsia agreed on was that the opaque pricing system doesn’t work. “We acknowledge there’s variation in hospital charges for a multitude of reasons,” Emerson-Shea said. “It’s part of the broken health care system that we’ve had in this country for several decades.”

“I think it would be in everyone’s interest to have a more rational system of hospital pricing,” Hsia said.

This post has been updated to clarify Dr. Hsia’s comments on hospital discount programs.

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