Medical Costs, Bond Drive Pet Insurance

The rise in the number of U.S. pet health insurance companies to the current 12 is evidence of increasing owner demand.


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Imagine making the gut-wrenching decision to humanely euthanize your sick dog when medical technology exists to save him. You can’t afford everything, and your human kids must come first. And, by the way, those human kids are looking up to you, faces tense with grief.

Veterinarians have families, too. And, boy, do they have feelings.

Veterinary medicine has been statistically documented as one of America’s most stressful careers. While ending a geriatric dog’s life is sad enough when the pain has become unbearable, ending the life of an animal that could make a full but expensive recovery is a shame.

That choice bothered Jack Stephens, DVM, in 1979.

“A client and her daughter brought their dog, Buffy, into my practice,” recalled Dr. Stephens. “Ultimately, the mother decided she couldn’t afford the dog’s treatment and requested euthanasia.”

Like many of us, Stephens complied with a heavy heart. A few weeks later he ran into the mother and her daughter at the grocery store.

“When her mother asked her daughter if she remembered me, she replied, ‘Yes, you’re the man who killed my dog.’”

Birth of a Company

This was Stephens’ defining moment. He has since founded two pet insurance companies, the first of which was Veterinary Pet Insurance, or VPI, of Brea, Calif.

Robert Bashore of Charlotte, Mich., has been a VPI policyholder for 20 years, through seven dogs. His first encounter with the high cost of veterinary care occurred at Michigan State University’s veterinary teaching hospital, where he received a $2,000 bill for the treatment of his dog after it was hit by a truck.

“I think the biggest thing is peace of mind,” he said. “We have insurance for us, and we have insurance for our kids. And our dogs are essentially our kids.”

Sitting with other pet owners in the animal emergency room, Bashore heard plenty of them bemoaning the choice between saving their animals and suffering devastating financial consequences, or saying goodbye.

“I’d never want to have to do that,” he declared.

The human-animal bond has grown tremendously and has carried much of the demand for veterinary medical care on the companion animal side of the profession, noted Carol McConnell, DVM, VPI’s chief veterinary officer.

“Additionally, what we can do for pets now has just exploded,” Dr. McConnell said.

Based on VPI claims data, the cost of veterinary services has risen over the past five years:

• 2006-07: up 6.7 percent
• 2007-08: up 5.2 percent
• 2008-09: down 2.2 percent
• 2009-10: up 2.1 percent
• 2010-11: up 5.6 percent

Even during these challenging economic times, the pet insurance industry is steadily growing, said Dennis Rushovich, CEO of the Hartville Group Inc. in Canton, Ohio, the provider of ASPCA Pet Health Insurance.

“People are realizing that good care for their pets is potentially quite costly because there are many more advanced procedures available that will improve the quality of life for their pets,” he said. “They’re also more willing to have these advanced medical procedures done.”

More Affordable Care

The rise in the number of U.S. pet health insurance companies to the current 12 is evidence of increasing owner demand, added Mary Beth Leininger, DVM, Hartville’s vice president of veterinary relations.

“It’s often the pet owners who have had pets with serious medical problems that caused them a financial hardship who go on to buy pet insurance for their next pets,” she said.

“Veterinarians are also becoming more aware of how important pet insurance is for clients,” Dr. Leininger continued. “It helps clients both accept and afford their veterinarian’s recommendations. As veterinary care options have become more advanced, pet owners continue to want this high level of care for their pets, though they need ways to help them afford it.”

Noting that many veterinary facilities offer digital radiography, ultrasound, magnetic resonance imaging and computed tomography scans, “The general public is becoming aware of the cost of veterinary technology,” said Jules Benson, BVSc, MRCVS, vice president of veterinary services for Philadelphia-based Petplan Pet Insurance.

“Most people don’t have $5,000 to $10,000 that they can comfortably put on a credit card,” Dr. Benson said. “We just paid for a bone marrow transplant for a lymphoma patient at North Carolina State University.”

Insurance company executives emphasized the difference between pet health insurance and human health care.

“We want to stress that pet insurance is not managed care,” said Scott Liles, VPI’s executive leader. “With pet insurance, the relationship is between the veterinarian and the pet owner. We don’t get involved in how to treat the pet or what the veterinarian charges. The pet owner pays the veterinarian directly and submits a claim to VPI for reimbursement.”

Different Oversight

VPI’s McConnell said managed care is unlikely to enter the veterinary marketplace.

“We don’t have employers, unions or the government coming to the table representing hundreds of thousands of lives and leveraging health care providers to participate,” she said. “Also, managed care requires veterinarians to sign contracts to participate in networks, and I don’t believe veterinarians will do that.”

Pet insurance is regulated like property and casualty insurance for a car, explained Rushovich, of Hartville, and Stephens, now president of Pets Best Insurance in Boise, Idaho.

“Like any new product, treatment regimen or drug, there are things that need to be understood by veterinarians and their staff,” Stephens said.

“First, medical conditions that exist, whether treated or not prior to the policy effective date, are not covered. Because noninsured pet owners are not financially prepared for a pet’s medical condition, when a serious or costly medical condition arises they sometimes wrongly assume that pet insurance can be taken out for the problem.”

Insurance is for “future unknown events,” Stephens said.

“You can’t expect to get car insurance after an automobile accident, and you can’t expect to get house insurance after the house has burned down,” Rushovich added. “In the same way, no pet insurance plan covers pre-existing conditions.”

Millions of pets have been helped by insurance, Stephens said.

“When pet owners have the leverage of (insurance reimbursement), they are able to respond to symptoms faster, accept more diagnostics and certainly more care,” he said. “Pet insurance has saved pets’ lives by making veterinary care affordable. Owners can afford the deductible and co-payment, but all too often cannot afford or are not prepared to pay the entire bill.”

“This is a very challenging time for practitioners,” Leininger noted. “Veterinary visits are down and many people are having difficulty affording even wellness care, much less the advanced veterinary care their pets may need. Few people can come in and easily pay $500 for a veterinary visit, so they need some form of financial help.”

Said Liles: “We want people to be able to make decisions based on their veterinarian’s recommendation and not on their pocketbook.”

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