Health Insurance, Veterinary Care, and the Not-So-Secret Benefits of Pets

Originally published on the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics Bill of Health blog.

Pet ownership is incredibly popular in the United States. There are almost 70 million companion dogs spread across 43 million American households.   This isn’t particularly surprising, given that study after study has shown that companion animals promote healthier, happier, longer lives for their owners. Despite pet popularity and prevalence, though, many pet owners don’t fully understand how expensive their four-legged family members can be — especially if they end up needing extensive veterinary care. Every year, millions of companion animals are euthanized because their owners lack the financial resources to pay for necessary veterinary services. Unlike in human medicine, pets in the hospital with readily curable ailments often go untreated for financial reasons.

How can we help people keep and care for their pets — capturing companion animal health benefits while also ensuring those pets receive the veterinary care they need? The answer might be found in the synergies between animal and human health — and the benefits they entail for health insurance providers.

The health benefits of companion animals have been extensively documented in both the scientific literature and the mainstream media. Pet owners have, inter alia, decreased risk of cardiovascular diseasedecreased risk of anxiety and depressiondecreased incidence of allergies, and increased immune system function. Some insurance companies even have materials for their customers promoting pet ownership because of these benefits. The health conditions ameliorated by animal companionship are often otherwise treated with doctor’s visits, medications, and other expensive interventions paid for in large part by insurance providers. In other words, pet ownership produces positive externalities on insurance providers by decreasing the amount they pay in traditional medical services for these ailments — and insurance companies have an interest in incentivizing animal companionship.

Insurance companies should consider covering or subsidizing companion animal health care as part of their insurance plans. This is potentially a win-win-win. Pets get the care they need, more people can have access to the benefits of animal companionship, and insurance companies could save money on medications and doctors that would otherwise be necessary for treating the chronic illnesses that pets have been shown to help combat.

To establish conclusively that bundling pet insurance as part of human health insurance would result in financial gains for insurance companies would require a fairly extensive economic analysis, which is beyond the scope of the present post, but the numbers suggest the potential is there. Veterinary care expenditures in the United States currently total to an annual $14.37 billion. While that number seems large, it’s dwarfed by the amount we spend annually on chronic diseases. The United States currently spends about $48.6 billion on high blood pressure every year, as well as $16.5 billion on anti-depressants, $17.5 billion on nasal allergies, and billions more on the other, more serious issues that these chronic illnesses can exacerbate, including $110 billion on cardiovascular disease. Thus, even relatively small reductions in the prevalence of these diseases — and the complications to which they lead — could result in savings that well exceed total veterinary care spending.

Now, of course, there is a moral hazard issue here. Covering medical expenses for companion animals could result in owners seeking far more veterinary care for their pets than they currently do or than is necessary. Indeed, given the number of animals that are euthanized each year for lack of funds, it’s likely that health insurance providers covering costs would increase demand for veterinary services. There are reasons to believe, though, that the increase may not be as pronounced as we might fear. For one, the insurance company need not foot the entire bill to capture the beneficial effects of incentivizing pet ownership. Subsidies for veterinary care could involve some cost sharing, which would disincentive seeking excess, unnecessary care. Furthermore, as in human medicine, financial assistance with veterinary care costs could increase preventive measures to combat companion animal diseases, which could end up reducing demand for more extreme, expensive measures down the road. By covering veterinary care, insurance companies could even decrease the overall cost of care, because veterinary hospitals would no longer have to budget for the free procedures they often perform for clients who cannot pay.

This wouldn’t be the first time health insurers cover costs to incentivize healthier living. Many insurance providers cover or subsidize, gym memberships, weight-loss programs, acupuncture therapy, massages, and more in hopes of encouraging behaviors that have been shown to decrease the incidence of chronic diseases. Not only does this decrease their long-term expenditures on their patient populations, it also serves as a mechanism through which they can compete with other providers. It’s possible that covering or subsidizing veterinary care could serve largely the same ends.

Companion animal health hasn’t traditionally been considered among the levers insurance providers have at their disposal to promote the health of the people they cover, but maybe it should be. More quantitative research is needed to flesh out exactly how the coverage or subsidies would work, but this is certainly worthy of exploration. By encouraging and enabling people to have healthy companion animals, health insurance providers could save money, make their customers healthier and happier, and help millions of animals receive veterinary care to which they may not otherwise have access. It could be a win for everyone — those of us with two legs and those of us with four.