Blame the Vets? Why Pet Health Insurance Hasn’t Flourished in the U.S.
Pet health insurance in the United States has, by most accounts, been a disappointment. Despite a growing number of pet owners, this sector covers fewer than 10% of the nation’s pets. This is a stark contrast to countries like the United Kingdom, where as many as 25% of pets are insured, and Sweden, boasting a remarkable 90% coverage.
While numerous factors contribute to this underperformance – including pet insurance companies’ missteps and the public’s general wariness of insurance – I believe a significant portion of the blame lies with veterinarians. Ultimately, we hold considerable influence over pet owners’ decisions regarding their pets’ healthcare, especially when it comes to products intertwined with providing care.
A Look Back
I’m old enough to recall the early days of the modern pet health insurance industry. Although companies existed as early as the 1970s, the 1990s marked its true integration into veterinary medicine. That’s when it first gained a foothold in small animal practices, and early discussions about its impact on veterinary medicine ignited across online veterinary forums. The initial conversations among veterinarians were overwhelmingly negative.
Many vets saw it as a harbinger of the problems plaguing human medicine. The prevailing view was that there was no way we were going to let this happen. We were very wary. The last thing we wanted was third-party payment plans turning our practices into places with more billing specialists than veterinary technicians.
For years, equine medicine has dealt with equine insurance – successfully, uneventfully. But small animal veterinarians had never been exposed to the concept. The fee-for-service model had built their successes, and they saw pet health insurance as a threat – a Trojan horse, even. The fear was that these early companies would come across as friendly, with reimbursement-only models. After they established their position in the market, they would switch us to a third-party payment system. Practices everywhere would dive into the muck of managed care. Insurers would dictate our fees and tell us how to practice. This fear was understandable, considering that a larger percentage of veterinarians owned their practices at the time. They were succeeding; why risk that?
The era was also marked by a growing fear of lawsuits and early practice consolidation. The industry’s growth was scary, and pet health insurance was an easy target for our fears.
The Real Threats
In retrospect, we weren’t entirely wrong. The 1990s was the decade when it became clear we were losing control of the profession. Ironically, pet health insurance should have been the least of our worries. Big Pharma, Big Pet Food, and large laboratories presented greater threats. Pet health insurance is – as it has ever been – just another tool in our marketing arsenal.
From the beginning, pet health insurance marketed itself as a tool to help us grow our practices. Companies claimed that if we simply recommended insurance to clients, we would attract more willing and able to spend on our services. However, as a profession, we blocked the industry’s efforts – at least at first. Though we eventually decided it was not the Death Star we once predicted, we have never adopted a pro-insurance position. Most of us still do not actively promote it. We continue to behave as if insurance has nothing to do with what we do or how we practice.
Consider the Possibilities
Just imagine a hypothetical scenario: What would your practice look like if every single one of your clients had pet health insurance? How much simpler would your life be if you could discuss finances without having to worry about it? Would you earn more money and experience less stress? Yes.
Would your practice have incrementally more paperwork? Sure.
Would you have to spend some time discussing insurance with every new client? Definitely. (Although your team could do it for you.)
You might even have new issues to resolve if the insurance company denies a claim. Sadly, this also is true. But would you feel more fulfilled as a clinician, able to practice the way you have always wanted? Certainly.
Why wouldn’t you promote that peace of mind?
My Experience
Over the past decade, I’ve increased my practice’s insurance penetration from around 5% to about 15%. Even with this modest increase, I’ve observed a major difference in my associates’ comfort levels with finances. Furthermore, I rarely hear clients complain about their policies or voice discontent with their decision to maintain one.
So, why do most of us continue to practice as if pet health insurance is unavailable?
We breathe a sigh of relief when we learn a sick patient is insured, but we do not carry that forward into an active plan of pet insurance promotion. Why?
- “It’s not our job.” We promote crate training, seat belts, pool safety, and microchips, even though we aren’t salespeople. Why wouldn’t we promote something that makes it easier to treat a sick pet?
- “It’s tacky to talk about financial products that might seem self-serving.” Is it not tacky to have to cross out items on an estimate because people cannot afford them?
- “I don’t have time.” I understand that, but don’t you have a team? Plus, consider the time you’ll save when the client isn’t nickel-and-diming you over a urinalysis or a complete blood count.
- “Insurance is a scam.” Insurance buys peace of mind. That’s it. Just because you do not like spending your money on it, does not mean others do not cherish the same.
A Cynical Turn
So, is pet insurance a flop? I have been thinking about this subject ever since a pet insurance company dropped hundreds of thousands of pets from their policies. When my sister called to report two of her older shepherds had been dropped, I felt almost personally aggrieved. After all my support for pet insurance over the decades, that company dumps on my eternal optimism, proving pet insurance carriers are not to be trusted.
It is clear the industry has not come too far in all these years. If companies will not stand behind their products and regulators do not care enough to make rules that protect pets … it has obviously failed.
Yet, the very next week, another company paid a $12,000 neurology bill for one of my French Bulldog patients. The client even sent me a card thanking me for recommending pet insurance when the dog was a puppy. When was the last time you got a tangible thank you for recommending a product?
Which leaves us where? I feel increasingly cynical about pet insurance. Nevertheless, I won’t be altering my recommendations and practices regarding it anytime soon, much like when I recommended commercial pet food after 2005’s major recall. We just have to come to terms that there’s a cost to doing business with every supplier in our industry. Pet insurance is no exception. Moreover, I continue to maintain that veterinarians are primarily responsible for the industry’s failure.
If we were more involved in the industry’s inner workings, taking more credit for its successes, along with greater responsibility for its failures, more pets would receive the healthcare they deserve, and fewer companies would risk our scrutiny by dropping pets from their insurance.
Patty Khuly, VMD, MBA, owns a small animal practice in Miami, Fla.
