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March 4, 2020

Why is it so much cheaper to treat pets than humans?

Daily Briefing

    Rising health care prices in the United States are a frequent talking point for providers and lawmakers, but when it comes to health care for our pets, prices are actually declining, thanks in large part to price transparency, Ross Marchand, director of policy for the Taxpayers Protection Alliance, writes in a post for Catalyst.

    Why health care prices for pets are lower

    When you take your pet to the veterinarian, you generally know the cost upfront, Marchand writes, citing his recent experience taking his cat to the vet. However, if you ask your hospital what the price of a procedure might be for you, you're unlikely to get a clear answer, he adds.

    This is because, for veterinarians, "insurance simply isn't part of the conversation," as less than 2% of pet owners nationwide have insurance policies, Marchand writes. By contrast, he writes that government surveys show about 90% of Americans have health insurance. "When the government and/or insurers are footing the bill, providers have little reason to disclose prices," Marchand contends.

    All this means that veterinarians have an incentive to price procedures at what consumers are willing to pay, and this has had a positive overall effect on health care prices for pets, Marchand  asserts.

    According to researchers with Nationwide, which has partnered with Purdue University to track trends in pet insurance payouts, ordinary expenses for pet health care declined by 6% between January 2009 and December 2017, after adjusting for inflation. Similarly, according to the American Pet Products Association's annual consumer spending surveys, cat and dog owners are reporting spending less money on average for routine and surgical vet visits. By comparison, between 2008 and 2018, health care prices in the United States increased 21.6%.

    Marchand acknowledges that there are significant differences between health care for pets and humans. For example, pet owners are less likely to treat their pets for cancer than they would be for themselves.

    "All the same, prices continue to decline in real terms as a rapidly growing percentage of pet owners regard their companions as members of the family and worthy of medical care," Marchand writes. "Perhaps increasing consumer exposure to prices and empowering them to pay medical expenses directly via Health Savings Accounts would lead to the same declining prices seen in the veterinary world," he adds.

    While the "norm" of discussing the cost of pet care "may be unpleasant," Marchand writes, "it sure seems to keep costs under control." He concludes, "Humans and their pets can benefit from a price structure that encourages competition and cost control" (Marchand, Catalyst, 9/6/19).

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