Sean Gaw - Tufts
This is an Op-Ed piece written in response to Peter Fenton's recent article published in the Washington Post.
The views and opinions expressed in this article do not necessarily reflect those held by The Vet Gazette or the Student American Veterinary Medical Association.
The US pet insurance market has exploded in the last ten years, forcing veterinarians to decide whether these insurance products help or hinder their care of animals. Many of the reasons for considering pet insurance are obvious, but many owners are unsure that it’s the right fit for them, especially when some consumer protection organizations and veterinarians oppose pet insurance. With careful review, it’s clear that the advantages outweigh the potential negatives and educated insurance consumers can reap life-extending benefits for their pets despite increasing costs of veterinary care.
Americans spend much more money on their pets than people in other countries and they routinely do it out-of-pocket.1 Part of the reason for this is that there wasn’t much competition in the pet insurance market for years, with VPI being the only pet insurer in the country from 1982-1997. That has changed in the 21st century with almost a dozen companies vying for a share of the pet insurance market2—a market that is largely unregulated, incidentally.3 VPI still controls 60% of the insurance market as of early 20114 and, combined with ASPCA Pet Health Insurance and 24PetWatch, these three companies offer 90% of the pet insurance products available to consumers.5
There are several reasons for this expansion, perhaps most significantly the increasing sophistication—and commensurate cost—of veterinary care.4 The wider variety of insurance options offered by the new companies has also stimulated more Americans to buy pet insurance. Since virtually all Americans (98%) consider pets to be family members,1 they want the best health care possible for their pets and many of them (43%) are interested in finding out how they can use insurance to help afford it.6 Lastly, animal shelters and adoption agencies are increasingly offering free pet insurance trials to cover shelter-associated illnesses, which is boosting the number of owners purchasing pet insurance.1
To put perspective to the increasing cost of veterinary care, Americans spend $14.1 billion a year (2011) on veterinary care for their estimated 152 million pets.2 As one quarter of pets don’t visit the vet, this averages to $123/year/pet. This total cost has been increasing about 10% per year over the past decade, far outpacing inflation, which has been in the 2-3% range. As owners spend more on veterinary care, the cost of insurance can seem benign at an average price of $25-30 per month.4
From the veterinarian’s standpoint, pet insurance can be a good way to minimize accounts receivable and avoid being a lender to clients.6 In addition, according to VPI, insured pets will get twice as much care, make 40% more appointments, and have a 41% higher cap on what they will spend before ceasing treatment, which ideally translates into the opportunity to deliver better health care for higher compensation.6
While these pragmatic economic and business issues may drive the burgeoning of the insurance market, the veterinarian is still obliged—by both client service and professional ethics—with identifying whether pet insurance contributes to better animal health and an ideal relationship between veterinarian, pet and client. The most obvious reason to obtain insurance is that severe illness or injury, for example a heart surgery, can easily cost several thousand dollars to treat.1,3 Insurance is a way to cover that cost without breaking the bank, even if it happens early in the pet’s life. Consumer Reports, despite reporting negatively on pet insurance (and veterinary care costs in general), admits that pets with significant illness will cost the owners less money if they are insured.5
Many owners are sympathetic to this stance that veterinary care costs are too high and seek ways to save money, commonly because of sticker shock.7 Despite being very willing to pay much more, in aggregate, for designer dog food,1 the abrupt and too often unplanned-for costs of veterinary care drive owners to low cost clinics, shelters, big box pharmacies, and on-line supply stores.7 Pet insurance can mitigate those costs or at least act as a kind of loan by dividing vet care costs into monthly premium payments.
Lastly, Petplan reports that 1 in 3 dogs is injured every year1 and VPI reports that 90% of its clients make claims on their insurance.4 This indicates that the likelihood of a pet requiring veterinary care is fairly high and owners need to account for that risk in some way. To give perspective, the most common insurance claims include swallowed objects, cancer, ear infections and allergies in dogs; kidney disease, cancer and bite wounds in cats.2 These are situations that few pet owners will completely avoid for the life of their pet.
There are real inconveniences to pet insurance products that must be addressed. The most common complaint is that pre-existing and genetic conditions (e.g., a heart murmur) are not covered by most plans.1,2,3,5 Veterinarians can clarify this issue for owners in two ways. Pet insurance is a risk-sharing enterprise, not a risk-transfer system, as it is in human health insurance.8 Some responsibility for the pet’s health care costs will still resolve to the owner, which is completely appropriate. In addition, some of the insurance companies provide comparisons between their plans and a few third party websites (e.g., Pet Insurance Review) also provide comparisons between different company’s products, allowing owners to select the best coverage for their individual pet.1
A related concern is that insurance companies will sometimes reduce coverage if a pet develops a chronic condition or will only cover the first treatment.3,7 While there may not be a plan switch to help an owner out in this situation, there is a simple reason for this coverage restriction: pet insurance premiums are cheap. Comparable human health insurance costs hundreds to thousands of dollars a month. By reducing guaranteed ongoing payments, pet insurance companies can offer insurance for only $30 per month.
Consumer Reports recently reported that pet insurance doesn’t pay; simply setting aside money for vet care is the better option.1 In addition, since almost all pet insurances are reimbursement-based,7 the client has to front the money regardless of insurance status. The latter argument is easily addressed by options like CareCredit, which allows owners to avoid fronting money while awaiting reimbursement for zero interest.6 The myth here is that pet insurance is some kind of investment; the point of insurance isn’t to use it. Much like term life insurance, it may be un-recouped money, but the alternative to getting your money back is actually the ideal situation: good health.9 Setting money aside can make a lot of sense, but it requires both diligence and a lag time while funds accumulate to make treatment affordable. Disease, sadly, has no lag time.
Veterinarians opposing pet insurance make three main arguments. First, insurance will degrade the quality of care vets provide just like it has for human doctors, if only by influencing them to provide covered care rather than uncovered care.10,11 Pets may receive treatments they don’t need or fail to receive necessary treatments. In a country where only 0.5-2% of pets have insurance, the insurance company is a tiny voice in the veterinarian’s world9 and furthermore unlikely to develop this control. In addition, owners have options for what kind of insurance to buy, unlike the situation with human health insurance where they are dependent on their employer to provide adequate and appropriate coverage.8 Also unlike in the human medicine world, the insurance company does not have a contractual relationship with the veterinarian so can only influence care through the client. Our model of the ideal determination of care is based on the veterinarian-client relationship so insurance doesn’t have the opportunity to interfere. HMO’s, which are currently being offered to the pet-owning public, could disrupt this relationship as they have in human medicine,2,12 but they are not endorsed by the AVMA and are even illegal in Canada.13
The second argument is that it’s more work for veterinarians to handle insurance claims for clients, even if they’re only signing paperwork.14 Since veterinary medicine is a service industry, denying clients assistance with this task is a better way to lose business than penalize pet insurance companies. This is not different than getting pet records from a referring DVM, a service that is routinely provided free of charge despite the time involved.9 Providing assistance with insurance claims can be an added value service that justifies higher fees.6 In addition, many electronic medical record systems have the capacity to ease these tasks, minimizing the impact on veterinarian’s time.14
Third, some veterinarians don’t want to be a shill for the pet insurance trade. However, veterinarians commonly recommend many products, from antiparasiticides to obedience classes to grooming or boarding. Insurance is just another service to the pet-owning public that’s outside the scope of veterinary medical services.9 Developing relationships with clients where they seek input first from their veterinarian when making decisions related to their pet’s health should be every veterinarian’s goal.
In closing, perhaps the best way of looking at this issue is not to compare pet insurance to human health insurance, but to compare it to pet insurance elsewhere in the world. In the UK where 42% of dogs and 25% of all pets are covered,15 pet insurance has worked well for over forty years and vets there have neither suffered income losses nor forsaken their medical integrity. Veterinarians may not be able to persuade all owners to provide veterinary care for their pets—17% of UK animals never see a doctor despite the relatively high insured population—but they can and should advocate for owners to provide the best care possible for their furry family members and help them obtain the tools that make that care affordable.
1. Worden A. “More U.S. pet owners turn to pet insurance to protect four-legged friends.” The Philadelphia Inquirer. 4 Jan. 2012:A1.
2. Meehan S. “How much is that doggie going to cost you?” USA Today. 7 Mar. 2012:5B.
3. Wojcik J. “Pet owners hounded by coverage exclusions.” Business Insurance. 26 Jul. 2010:6.
4. Gantz S. “Insurance more popular as veterinary costs increase.” Washington Post. 14 Apr. 2011:T16.
5. “Pet insurance: rarely worth the price, in our analysis.” Consumer Reports. August 2011.
6. Lee JG, Felsted K. “Investigate pet health insurance plans to help clients afford better care.” Veterinary Economics. 1 Oct. 2013.
7. Konrad W. “Containing the Costs of Veterinary Care.” The New York Times. 30 Apr. 2011:B6.
8. Catanzaro T. More on pet insurance and the veterinary profession. JAVMA. April 2008;232(8):1132.
9. Bertholf A. “Focusing on pet insurance: the myths and truths.” Veterinary Economics. 1 May 2009.
10. DiStefano J. “Capital Blue Cross now offering health insurance to cover pets.” The Philadelphia Inquirer. 25 Oct. 2011:A16.
11. Brechtel C. Comments on effects of pet insurance on the veterinary profession. JAVMA. February 2008;232(4):503-504.
12. Baum A. Opposes pet insurance. JAVMA. May 2004;224(9):1419.
13. Burns K. Managed care for companion animals. JAVMA. March 2007;230(5):637-638.
14. Richmond R. Pet insurance: better care, happier clients. Australian Veterinary Journal. August 2013;91(8):N20.
15. Asher L, Buckland EL, Phylactopoulos CI, et al. Estimation of the number and demographics of companion dogs in the UK. BMC Veterinary Research. 2011;7(74).