Pet health insurance: What we're learning from ObamaCare

Pet health insurance: What we're learning from ObamaCare

Veterinarians—not insurance companies—may be in charge now and in the future when it comes to pet insurance.
Dec 01, 2009

Christopher J. Allen DVM, JD
If I were to raise hell at a "town hall debate" over health insurance, it wouldn't be about rationing, the public option or the plight of the uninsured. I would complain about the failure (almost conspiratorial, I think) of either side of the reform debate — the politicians, the media, the pundits — to explain in understandable language what the draft legislation actually would do and how each proposal would work.

We all know perfectly well that no one is going to kill Grandma, and we all know that the current system of health insurance, underwritten at last resort by taxes, is unsustainable. But why won't anyone summarize clearly what the proposed House and Senate bills contain and what the various programs will cost?

We're in the driver's seat: Veterinarians—not insurance companies—may be in charge now and in the future when it comes to pet insurance.
Motivated by frustration with the human health-insurance debate and a belief that pet insurance is a critical concern for our profession, I want to explain the fundamentals of pet health insurance as it is available today. And I want to do so succinctly.

Personally, I am a convert. I have disliked the insurance industry ever since I was an insurance attorney in the early 1980s. Insurance is the house's game. It is a poor investment in almost every case. Nonetheless, it is a vital and indispensible risk-management tool, without which modern business — and health care — would grind to a screeching halt.

So why am I a convert on pet health insurance? Why do I now believe wholeheartedly in a concept that made me chuckle during my first 20 years in veterinary practice whenever a client would ask about a pet policy?

I believe in pet health insurance now for two simple reasons:

First, insurance has improved.

Second, I am tired of telling my clients that they can't afford what my colleagues and I can do for them.

How pet insurance differs from human-health policies

There are a lot of differences between human health coverage and what is out there for pets, but one difference that really jumps out at me is one that few of us consider. For humans, the government and insurance industry are in the driver's seat, but in the pet health insurance world, you and I run the show.

It's true. We DVMs will make or break this business, and here's why: Not many employers are going to offer pet insurance as a workplace benefit (except vets, maybe). No college is going to require pet coverage before your kid is allowed to enroll. I haven't run across anybody yet who lies awake at night because he doesn't have a quality major medical policy for his dog or cat. Who makes the market in this product? We do — private veterinarians, specifically general practitioners.

This is a tough pill for the pet-insurance industry to swallow. It would make for a pretty sad business-school case study where a product's only genuine sales force: 1) doesn't know much about the product, 2) has another demanding full-time job, 3) hates to sell things, and 4) is prohibited legally and morally from accepting lavish gifts and premium-splitting schemes.

So what are salespeople in a niche insurance market to do? They are forced to default to Plan "B" — encouraging us to recommend their product because it is in the best interest of our clients and ourselves to get more pets insured. And this is, in my opinion, exactly what is happening.

Another key difference between the human health-care model and that for pets is the availability of a "health- care financier of last resort."

Currently, a person's sudden, catastrophic medical problem will be handled fairly quickly, and there will be somebody to pay for the care. For example, if an uninsured, indigent 70-year-old suddenly discovers he can't urinate, he can go to an emergency room and receive immediate catheterization and aftercare. If he cannot pay, the hospital eats some of the cost and the government eats the rest.

Pets have no last-resort payer unless the hapless cat or dog owner whose pet is in the same boat as our human example stumbles upon a vet generous enough to do the catheterization at midnight for free.