Could pet insurance be a potential model for human health care insurance? A new editorial in the Weekly Standard by Eli Lehrer, vice president for D.C. operations at The Heartland Institute argues, that there are many features of pet insurance that are highly desirable in human health care and that could serve as a model for the future, but it isn’t perfect.
Pet insurance offers many benefits that many human insurance policyholders would kill for: low costs, greater choice in products and services and more flexibility in coverage, all while being regulated primarily by market forces and not government regulation. While Lehrer warns that many of the mechanisms that allow the pet insurance market to work so well cannot be replicated in the health care market, due to layers and layers of rules and regulations, there is ample ground for similar innovations.
The market for pet health insurance is a competitive one that offers many popular, desirable policy features—including many that politicians want to impose on the human health insurance industry. But it’s not perfect. A detailed look at the market, the least regulated broad health benefits system in the country, suggests it would be impossible for the human health insurance system to simultaneously do everything people say they desire, contain costs, and follow purely market principles. This isn’t a reason for free market health care reformers to despair but, rather, a cause for them to be careful about what they promise.
The positive aspects of the pet insurance market aren’t trivial. For starters, it offers far more choices. Only 3 companies market individual health insurance in New Jersey, while at least 10 write policies for dogs and cats. And the pet insurance carriers offer plans with benefits to fit any budget. Almost all pet insurance policies provide the same coverage at any hospital or vet, whereas almost all human health policies have no or limited benefits for “out of network” care. While people over 50 can have a very difficult time finding individual health insurance at any price, coverage for older dogs and exotic breeds isn’t a problem since several companies will write a policy for any dog or cat of any age. And many of the features politicians have felt themselves compelled to mandate in health insurance plans are provided by pet carriers as a matter of course. Even very cheap policies often throw in some “wellness” coverage that discounts routine tests and checkups. And the pricing schemes are also more attractive than those in the private individual health market. Although pet insurance premiums rise yearly as individual pets age and veterinary costs go up, many pet insurers don’t increase them on the basis of claims history, and most promise never to drop coverage no matter how sick a pet gets.
Eli emphasizes in his article while pet insurance can provide a useful model for human health care, it does have its own flaws. These flaws are not due to any inherent problems with the market, moral or economic, but rather because “certain aspects of human health simply transcend the economic.”
Eli’s article was mentioned in a Washington Post article by Sarah Kliff who expanded on this point. One of the most obvious differences between pet insurance and human health care is end-of-life care. While health care costs for human patients are highly concentrated in the last years of life, pet health costs can be lower, due to additional options lime euthanasia.
The one biggest difference, however, between pet health care and its human counterpart is likely end-of-life care. That tends to be one of the most expensive part of health insurance for humans, with 27 percent of Medicare dollars spent on the last year of life. Suffice it to say, end-of-life care for dogs comes with quite different options, including euthanasia.