Child's Hospital Stay Can Cost Plenty, Even With Insurance

sick child in hospital
sick child in hospital

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Key Takeaways

  • Out-of-pocket costs when a child is hospitalized in the United States can be steep even for those with health insurance

  • The bill can be especially high early in the year, before deductibles have been met

  • About 1 in 7 families with private insurance pays more than $3,000 out-of-pocket

TUESDAY, March 28, 2023 (HealthDay News) -- When a child is hospitalized, cost may not be the greatest worry but the out-of-pocket expense can be substantial in the United States, even for those with insurance.

A Michigan Medicine study found that U.S. families covered by private insurance spend an average of $1,300 out of pocket for a child’s hospital stay.

And about 1 in 7 of those families pays more than $3,000.

“Bills for a child’s hospitalization can be astonishingly high for some families depending on how their insurance plan is structured,” said lead author Dr. Erin Carlton. She is a pediatric intensivist at University of Michigan Health C.S. Mott Children's Hospital, in Ann Arbor.

“For families without savings, these bills could have negative impacts on their family’s well-being,” Carlton said in a university news release.

For the study, the researchers analyzed nearly 184,000 non-birth related hospitalizations for about 131,000 privately insured children aged 18 and younger. The data spanned 2017 to 2019.

Out-of-pocket spending was particularly high for hospitalizations early in the year; those covered by insurance plans with high cost-sharing requirements; and those that involved healthy children without chronic conditions, the investigators found.

The bulk of out-of-pocket spending was for co-insurance payments — $861 per hospitalization, on average. More than one-quarter involved deductibles —averaging $389 per hospitalization. In all, 5% of families’ bills were for copayments.

About 80% of children in the study had a chronic condition, such as asthma. Yet families whose children had no chronic conditions spent the most on hospitalizations — $1,746, on average.

Families of children with chronic conditions may have already met their plan’s deductibles, Carlton suggested.

“For families with healthy children, the hospitalization may be one of the first major medical expenses during the year,” she said. “This could explain why they are subjected to larger deductible and co-insurance payments.”

Insurance plans tend to reset deductibles in January, leading to higher costs early in the year.

Intensive care services and longer hospital stays were associated with higher bills but were generally modest, the study found.

Out-of-pocket spending was almost twice as high for hospitalizations covered by the least generous plans, the authors noted. Those plans required a deductible exceeding $3,000 and co-insurance of 20% or more for hospitalizations.

“Our findings suggest that resource intensity, such as intensive care use, isn’t a major driver of hospital bills,” Carlton said. “Instead, one of the most significant factors driving higher out-of-pocket spending is the degree to which insurance plans expose families to the high cost of hospitalization through deductibles or co-insurance.”

Senior study author Dr. Kao-Ping Chua said that while cost-sharing may help reduce use of unnecessary medical services, it’s not appropriate for potentially life-saving pediatric hospitalizations.

“If the goal is to decrease health care spending, there are better ways to achieve this than to subject families to huge bills just because their child was unlucky enough to get severely ill,” said Chua, a health policy researcher at the University of Michigan's Susan B. Meister Child Health Evaluation and Research Center.

Private insurers may consider denying coverage of unnecessary health care services, Chua said, or policymakers might address the drivers behind high prices for inpatient hospital care.

Private insurers could also attempt to spread out deductibles more evenly throughout the year to prevent a significant financial blow from an unexpected hospitalization.

The children in the study were mostly between 4 and 16 years of age. Severe mental health disorders and bronchitis or asthma were two of the top three reasons for hospitalization.

The study didn't account for indirect costs associated with hospitalizations, such as missing work to be at a child’s bedside. It also didn't explore whether hospitalizations led to worsened financial health, such as increased debt.

“A pediatric hospitalization is often unexpected, and many families aren’t prepared for all the financial repercussions once they’re home,” Carlton said. “Our findings show that restructuring how insurance plans cover hospitalizations could help alleviate this financial burden on families.”

The study findings were published online March 27 in JAMA Pediatrics.

More information

KFF has more on employer health benefits.

SOURCE: Michigan Medicine – University of Michigan, news release, March 27, 2023

What This Means For You

Even if you have health insurance, be aware that a child's hospital stay could leave you with a four-figure bill, due to deductibles and cost-sharing requirements.

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