Michelle Singletary
Michelle Singletary
Columnist

Prince George

One thing Prince William and Catherine, Duchess of Cambridge, won’t have to worry about since welcoming their new baby – the bill to bring him into the world.

“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.

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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.

Although the 529 plans are state-sponsored, you can invest in any plan regardless of where you live. And money invested in a 529 plan can be used for a state or private institution. Every state and the District of Columbia offers at least one 529 plan. For more information, go to www.savingforcollege.com.

If you’re having trouble figuring out how to start saving for college, Pinsker spoke with several financial experts who offered some of the following tips:

-- Separate your savings. “The smallest logistical hurdles can make a huge difference,” according to David Laibson, a professor of economics at Harvard University. “Psychologically, putting money in something like a 529 plan is better than just putting it in a checking account and hoping you will have the strength not to spend it over 18 years.”

-- Create a gold, silver and bronze plan to pay for college. Brigitte Madrian, a public policy and corporate management professor at the Harvard Kennedy School of Government, tells Pinkser that parents should consider setting up a menu for college savings accounts similar to the designations for health insurance plans. So for example, a bronze plan might target saving for a state university or community college. “It doesn’t give you an exact number, but it tells you what 100 percent of cost would be, or 60 percent. Then we back out to how much you’d have to save every month for 15 years, or 10 years, to accumulate that much,” Madrian says. “If it’s easy to think about, people might be more inclined to start saving anything.”

--Take baby steps. “Overcome that initial barrier to action by making the problem more manageable,” says John Beshears, an assistant professor of finance at the Stanford Graduate School of Business.

James Gandolfini’s Will

Like many others, I was saddened by the death of “The Sopranos” actor James Gandolfini.

Gandolfini, as many parents would, left a considable amount of his wealth to his children. Some experts say there are lessons to learn from how the 51-year-old Gandolfini divided up his estate.

“The will of Tony Soprano’s alter ego has sparked national commentary and debate over taxes, how to provide for family, and the efficacy of estate planning. Rich or poor, none of us want to be remembered for paying too much in taxes or giving our money away foolishly,” wrote Robert W. Wood, a contributor for Forbes.

Some experts believe Gandolfini’s will wasn’t written in the best way. Wood provides a link to the will.

Paul Sullivan, who writes for the New York Times about strategies that the wealthy use to manage their money, decided to call Gandolfini’s attorney to get the lowdown on the will. He also talked to several other estate experts.

“What the expert estate lawyers and financial planners I spoke to found was a loosely drafted will that had some good points but, in its brevity and simplicity, could cause problems for any 51-year-old, let alone a famous one,” Sullivan wrote. “They also acknowledged that there was much we might not know if a more elaborate estate plan with trusts and separate corporations had been set up.”

Whatever the experts may think of Gandolfini’s will, at least he had one. Do you?

Tia Lewis contributed to this report.

Readers may write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C., 20071, or e-mail michelle.singletary@washpost.com. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read previous Color of Money columns, go to www.postbusiness.com.

 
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