Any regular listeners of the podcast won’t be surprised to hear that Gen Xers and Millennials are going into debt for healthcare… but what if we told you that this time it’s for their pets! More Americans are spending more money on healthcare for their beloved pets, which means insurance companies are getting in on the action and cashing in! Today we’ll be digging into the wild world of pet insurance and what Peticare for All could mean for our four-legged friends (and zero-legged friends, and more than 4)!
Why talk about pet healthcare? MOSTLY so Gillian and Ben can show off Coretta Scott Cat and Koda the Medicare for All dog. Obligatory cute pet appearances out of the way, Gillian introduces our guest for this episode: Chris Dupuis, DVM is a vet and owner of the Wheatland Animal Hospital in Neighborville Illinois.
Chris definitely saw an uptick in pet ownership during the pandemic. Today, about 70% of US households own at least 1 pet, and Americans are paying a total of $32.3 billion on vet care.
Gillian went down a research rabbit hole, and found that as of 2020 nearly half (47%) of pet owners had gone into debt for their pet, up from 36% in 2019. This average covers a huge generational divide, though: 66% of Gen X'ers have gone into debt for their pets, while only 23% of Baby Boomers have done so.
Chris notes that one reason could be that veterinary costs have gone up a lot over the last generation, much like College tuition. Chris's dad, who founded the clinic, originally charged $8 for an exam in the late 1980s!
For human health, of course most of us turn to health insurance to protect ourselves from large unexpected costs that might leave us in debt. What about pet insurance? Chris explains that pet insurance is very different: pet insurers directly reimburse pet owners for their (allowed) expenses, so vets generally don't get paid directly by insurance companies or have to deal with them at all. In Chris's experience, many of his clients buy pet insurance policies without realizing how little it actually covers, or the restrictions involved (a lot like Medicare Advantage plans!).
So how bad is pet insurance? Virtually no plans will cover pre-existing conditions (which was common in human insurance plans until it was banned by the Affordable Care Act), including breeds that are frequently prone to certain health problems. There is very little regulation of pet insurance, so exclusions, deductibles, and payment limits are rampant. Both premiums and deductibles are often decided by the species, breed, gender, age and location of an animal - older pets in particular are very expensive and difficult to insure.
Because of this, very few people have pet insurance: only 3.5 million (less than 2%) of pets in America were insured in 2020. Chris says that vets themselves are often not very educated on pet insurance options for their clients, in part because there are so many plans and the plan limitations are so complex.
As important background, Chris explains that vets are generally underpaid (combined with massive college debts), and vet techs are EXTREMELY underpaid - sometimes earning barely more than retail workers ($15-$21/hour). This puts vet clinics in a difficult position when they have clients who can't afford to pay for urgent or emergency care for their pets. Unlike human hospitals, which receive some "uncompensated care" funds from the federal government for treating patients who can't pay, vet clinics and hospitals receive no such funds for providing free or charity care, and have very small margins.