Who Pays for Baby?

01.11.2011

In the LA Times Business Section last month, there was an interesting article about who pays for having a baby. Apparently, Californians who have to buy private insurance find maternity benefits to be scarce and expensive. Here are some highlights that I found striking throughout the article:

- The average cost to deliver a baby has reached nearly $13,000. With maternity insurance, the bill can be as low as $250.

- 81% of women who buy their own policies, don’t get maternity benefits because it’s too expensive.

- Pregnancy itself is a problem for health companies. Many consider it to be a pre-existing condition; therefore, you won't get covered if applying for coverage after becoming pregnant. (This is my favorite.)

- Blue Shield and Anthem Blue Cross are the only private insurance companies to offer maternity benefits but at an astronomical cost.

What’s fascinating to me is that so many people encourage healthcare privatization (especially with universal healthcare in our midst) – and yet, to have a baby with private insurance could bankrupt you. How is this logical?

Our society presses for couples to have a baby but will create ways to not help you.

Our society presses for couples to have a baby but will find ways to charge you for one.

Our society presses for couples to have a baby but will limit your options.

I’m not saying it should be free or that the government should pay for you to have a baby. Of course that’s not what I’m saying. You make the decision to have a baby, you should pay for it. BUT, it should not be considered a pre-existing condition, you should not be limited to just two insurance companies who are looking to rape you with costs, and something is definitely wrong when there’s a $12,750 difference between a couple having a baby that is insured and one who is not.

Do You Have $222,360?

06.11.2010

So if I needed any more ammunition to add to my worry about having a child, I open up my yahoo page to be faced with the following article: (Sigh….)

Cost of Raising a Child Ticks Up

by Sue Shellenbarger / Friday, June 11, 2010

Provided by the Wall Street Journal

A child born in 2009 will cost nearly a quarter of a million dollars, or about $222,360, to raise to maturity, up a little less than 1% from 2008, the Agriculture Department said Wednesday in its annual report on the average cost of raising a child. (The department runs the survey to help courts and state governments set child-support guidelines.) Expenses for child care, education and health care rose the most compared with 2008, while the cost of transportation for a child actually fell, the department said. Annual child-rearing expenses for the average middle-income, two-parent family range from $11,650 to $13,530, depending on the age of the child, the department says.

Child care accounts for 17% of the total spending, and education for 16% of the total. The cost of housing makes up nearly one-third of the total; this is gauged by the average cost of an additional bedroom. But the tally excludes any spending on kids over age 17, so it doesn't include one of the biggest and fastest-growing single financial outlays many parents make: the cost of sending your child through college. Higher-education costs aren't included, the department says.

Families in the Northeast have the highest costs, followed by cities in the West, then cities in the Midwest. Families in rural areas and in Southern cities have the lowest child-rearing costs.

For families with many kids, however, there is some good news: The more children you have, the less it costs to raise each one. These economics of scale deliver 22% savings per child for families with three or more children. That is because kids can share a bedroom, hand down clothing and toys to each other, and consume food purchased in bulk quantities, reducing costs. Also, private schools and child-care centers may offer sibling discounts. The data is compiled based on spending by 11,800 two-parent families and 3,350 single parents with at least one child under 18 living at home.

Based on previous reports by the department, the overall cost of raising a child rose 15% in inflation-adjusted dollars between 1960 and 2008. The increase has been driven largely by sharp increases in health-care, child-care and education costs, the department says. Interestingly, clothing and food costs have fallen, perhaps because of more efficient mass production of food and reduced costs of manufacturing clothing.

Readers, yesterday, the discussion turned to whether or not it's possible to raise a family on one salary. Does a report like this help in making that kind of decision or in planning your savings?[1]

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[1] http://finance.yahoo.com/family-home/article/109765/cost-of-raising-a-child-ticks-up?mod=family-kids_parents