Having a baby in the Twin Cities? Report says you will pay top dollar

Having a baby can be pricey in the Twin Cities.

Routine deliveries in the Minneapolis-St. Paul region cost an average of $11,527, according to a new report that ranked the figure as the third-highest typical price tag among 30 large cities.

The highest cost is in Sacramento, Calif., at $15,420, followed by San Francisco at $15,204, according to the report from Castlight Health Inc., a California-based firm that sells information services to health care purchasers.

High prices in northern California make sense because the health care market is highly consolidated, which means hospitals and doctors have market power when negotiating with health insurers, said Christopher Whaley, a researcher at the University of California, Berkeley who conducted the analysis.

But the market power explanation doesn't necessarily explain prices in the Twin Cities, Whaley said, since there is more competition here.

"For future work, we want to dive down deeper to try and understand why," he said.

The Minnesota Hospital Association challenged the report, saying it was based on data from health plans that don't provide coverage for most Minnesotans. Instead, the study is based on prices from large national insurers that "do not have enough market presence in Minnesota to negotiate preferred rates for their customers," the trade group said in a statement.

For decades, health care researchers have published studies showing wide swings in the costs for medical procedures in different parts of the country. Costs can vary because of the mix of services and operating costs in different markets. In some cases, doctors and hospitals have more power to negotiate higher prices.

While much of the research on price variation over the years has focused on the cost of services for Medicare beneficiaries, the Castlight Health report is an example of newer reports focused on the under-65 population.

Castlight's numbers are based on medical claims data plus provider rate sheets that list the negotiated price between health insurance companies and health care providers. Castlight says it applies a proprietary algorithm to obtain the provider prices used in the analysis, which are meant to reflect current costs.

While the Twin Cities and cities on the West Coast are at the high-end of the price spectrum, the report found Kansas City has the least-expensive average for routine deliveries at $6,075. Chicago ranks No. 17 with an average cost of $8,838.

The report found wide price swings within metropolitan areas. In metropolitan New York, the cost for a routine delivery ranges from $4,022 to $17,646, the study says. For Caesarean deliveries, the costs in San Francisco range from $8,399 to $41,191.

The study is one of the first to look at how the Twin Cities compares with other metro areas on the cost of deliveries, said Jim Chase, president of MN Community Measurement, a Minneapolis-based nonprofit that publishes reports on the cost and quality of care in the state.

There are many reasons why the average amounts listed may not be what the average person and health plan in Minnesota pays, Chase said, noting that it doesn't include data for the state's Medicaid program.

But Chase added: "We know there is a big range in how much providers are paid in Minnesota for deliveries, for pretty much the same service, so it pays to shop around."

Katy Kozhimannil, a researcher at the University of Minnesota, said she welcomed the report because patients shopping for maternity services currently don't have much information about prices. That's a problem because "with the rise of high-deductible plans, women and families are increasingly bearing out-of-pocket costs related to pregnancy care," Kozhimannil said.

While hospitals might contest the average price figures, the information is still useful to consumers, she said, because individuals don't typically pay the full freight anyway.

Christopher Snowbeck • 612-673-4744