Is American Pet Health Care (Also) Uniquely Inefficient?

That is the title of the new NBER paper by Liran Einav, Amy Finkelstein, and Atul Gupta, here is the abstract:

We document four similarities between American human healthcare and American pet care: (i) rapid growth in spending as a share of GDP over the last two decades; (ii) strong income-spending gradient; (iii) rapid growth in the employment of healthcare providers; and (iv) similar propensity for high spending at the end of life. We speculate about possible implications of these similar patterns in two sectors that share many common features but differ markedly in institutional features, such as the prevalence of insurance and of public sector involvement.

Note that the number of veterinarians doubled from 1996 to 2013.  The authors do not seem to have data on whether cats and dogs live longer in the United States, but I have a surmise…

Here are ungated copies of the paper.

Comments

"Note that the number of veterinarians doubled from 1996 to 2013."--how much did the number of pets grow by?

Also, it could just be convenience. Our vet works less, but non conventional hours, weekends and until 9pm. I imagine we get charged more for that which encourages more vets to enter the field. I happily pay a bit more for that luxury and wouldnt call it inefficient

> "I imagine we get charged more for that which encourages more vets to enter the field"

Supply/Demand/Prices tend to find their own level if left alone.

Why do veterinarians require state licenses and college degrees ??
Licensing always reduces entry into the field.

What's the real risk to society of "unlicensed" animal medical caregivers ?
(after all, society eagerly slaughters animals by the hundreds of millions for food and experimentation)

More importantly, we need right to try for pets. I can shoot my dog, but I can't give her medicine to extend her life without filling out forms or violating regulations. It's odd enough to argue people might hurt themselves, but that something might impact their personal property is downright nonsensical.

You have a highly unusual vet. Most vets today keep doctor's hours. No more calls in the middle of the night or on weekends. Nope - go to the Pet ER and spend tons of money.

The profitable business of educating veterinarians has led all the original American schools to increase class size dramatically, and state legislators to build about ten new ones. The AVMA has accredited almost ten offshore schools as well. There is no problem being admitted any more. The kids are graduating with 200k in debt, and starting salaries are what I earned in 1985. Vet med is a part-time women's occupation now.

Could this, in part, be a result of increasing prosperity? People have more income to spend on health care for themselves and their pets, driving demand and prices up?

This is a factor no doubt. The poorest nations spend the least on healthcare, the wealthiest nations the most. Once you have the basics covered (food, clothing, shelter, entertainment) what else is there to spend your money on?

Party, maybe also a result of increasing moral sensitivity towards animal rights. People feel way guiltier about putting an animal down than they did 20-30 years ago.

Putting them down? People feel racked with guilt for putting their dogs in a kennel for a weekend. So you can pay the kennel (pardon me, the doggie spa) extra for things like letting your dog play on a couch, or get a belly rub. All while you watch on an app via the CC TV camera. I am not making this up.

Yes, and an increase in the affects of the Bambi syndrome as a result of being divorced from the natural processes.

Productivity differentials. It is easy for Apple to produce an iphone that has more memory, speed, pixels etc. It isn't easy for vets to increase the lifespan of dogs and cats by another 2-3 years. Additional vets take on that challenge by first helping with the low hanging fruit (pets who die early because they don't get routine care). Beyond that treatment of diseases does not yield innovations easily, not unlike human health.

Like human health, there are not close substitutes for the product. A farmer is not so emotionally attached to an animal that he won't at some point opt to just replace it with a new one. Technology does not generate such attachment either. I'm happy to buy $4 headphones for my Android every month or so, tossing them when they break. But once you're attached to a pet there's no good substitute. Getting another dog is so much cheaper but it won't be the same as the dog you have spent the last decade with. Likewise simply going to a nursing home and chatting with an old woman is not a substitute for your grandmother.

The lapsed farmer nearest me was unsentimental and utilitarian about animals. He was not, however, unsentimental about his wife or his daughters, and was pleased to have pets around to accommodate them.

Why do people love dogs? They are vicious and constantly trying to 'one up' each other: every time two dogs meet there's a test of wills. Cats are cleaner and more agreeable, notwithstanding the protozoa vectors they harbor.

And the top pet (IMO) having owned dogs, cats, fowl, is: a monkey. Not just any monkey, but a Philippine mountain monkey (don't know the scientific name yet) that's so cute. We have two, one male, one female, and the good news is that the male now gets along with the female and doesn't constantly try to rape her (men are like that?). But they do fight during feeding time, maybe it's primal. Much more clever than a dog. In fact, the monkey bosses the dog around and the dog obeys: dog is monkey's bitch!

Have you ever tried children?

Only as girlfriends

I don't think your experience generalizes very well. My friend's cat that stayed with me would bring in birds and such and would get feathers over everything, her claws also damaged the furniture. Some breeds like labs don't really challenge other pets or people.

When I was traveling I say a dog catch and eat a monkey. The secret, as with many other prey, is to help by shaking the tree. Then you can skin it, soak it in brine, and saute in butter before feeding it to your pet. So it depends on the individual animals.

Monkeyfishing is a lot of fun.

http://www.slate.com/articles/news_and_politics/vice/2001/06/monkeyfishing.html

Like a lot of Americans, I should drop 30 pounds. But it's hard to resist temptation, you know.

I don't find it hard to resist the temptation to overfeed our dogs though. Empirically, I find that a lot of Americans must find this hard also, which I think is weird.

"I don’t find it hard to resist the temptation to overfeed our dogs though. Empirically, I find that a lot of Americans must find this hard also, which I think is weird."

Yes that is soooo weird, just give them less food, but so you see so many fat dogs these days.

Speaking from experience, pet care suffers from the same goofy pricing anomalies as human health care. I can buy antibiotics (amoxicillin) for fish no prescription, but for dogs, cats, or humans it requires a scrip. It is chemically the same stuff. There are tons of examples, from antibiotics and vaccines to flea and tick medicine. Heart-worm treatment is another absurd racket for the pharma companies. Some vets try to talk me into this or that brand dog food. Meanwhile, my last dog was healthy until the last few days of his life, all 17 years of it, on regular store bought stuff (plus whatever he could sneak from the garbage can from time to time).

The majority of the FDA drug and medicine rules "for our protection" are nothing but a scam designed to protect the pockets of vets and pharma companies. If you are smart, you can figure out ways around the rules (like fish mox). A lot of the drugs & antibiotics are the same for pets, animals, and people, only the dosage is different. And don't forget: Farmers are also big consumers of vet care products, particularly antibiotics.

Veterinary nostrums are a modest share of what your bills will be.

Those sound like statistics cherry-picked to make a specific point - that government involvement is not the cause of health care increases.

All four of the points they consider are explainable within in the context of a healthy market. Of course pet care costs are the hghest near the end of life. That's when most illnesses happen. This is a shock to no one except perhaps NBER economists. As pet care is a luxury good, of course you are going to see an 'income-spending gradient'. The increase in pet care workers could simply be a function of increasing wealth, or a change in public attitudes regarding pet health.

The key question is whether or not pet care costs as much as human care for similar treatments, and if not, how come? Another good question would be whether those treatments are seeing the same kinds of cost increases as the equivalent human treatments.

So, how does the cost of a pet MRI compare to human MRI's using the same machines? And are pet MRI price changes similar to those we see for human MRI's? How about the cost of medication or routine office visits? Those kinds of questions seem much more relevant to determining whether the pet health care markets are functioning well. So why aren't they looking at such direct measures rather than secondary, more convoluted measures like the amount of GDP we spend on pets?

Perhaps using better measures doesn't help advance a larger political argument?

The pet health insurance industry seems very primitive compared to the human health insurance industry.

There is no such product as health insurance for people any longer. What you identify as insurance is a tax. Animal insurance is actual insurance, i.e.- a product purchased in anticipation of an event.

Along with the growth with income, this is caused by the long term decrease in family size.

Total fertility rates have fluctuated around a set point for about 40 years now.

People have more disposable income and the services are more readily available. I'd never heard of an emergency veterinary service until about 2009, when our regular vet told us about one in Syracuse.

Or more explicitly, it's about the substitution of pets for children, such that many people have come to think that their dogs have been adopted by them and share their last names.

What you have nowadays is readily available emergency care. There are large specialty centers which take patients on demand 24/7. It's quite helpful if you have an elderly pet with standing problems which flare every now and then. These services are expensive, though.

Another aspect of it is that medical problems which would have induced you to have your pet put to sleep a generation ago are now treated, though I'm told by one of our vets that we should be asking ourselves whether it's for her or for us.

I wonder how this correlates with the adoption of pet health insurance.
And are people buying the insurance because they feel morally obligated to pay for their pets medical treatments, or are they paying for more expensive treatment because they have the insurance?

Also, I wonder if people's increasing feelings of obligation to pay for medical treatment for pets will ultimately lead to a trend towards declining pet ownership. Animal rights activists generally believe that owning pets is immoral and maybe people's guilt about not paying for animal's medical care has to do with increasing social sensitivity towards animal rights.

I also wonder if there's increasingly some growing societal obligation to provide better care for pets? I grew up on a farm, and we had many pets, but nature generally just took its course except in the cases where we'd doctor a cat with a hurt paw, or provide basic de-ticing, de-fleaing, neutering/spaying, heartworms, etc. In most cases our dogs/cats would just run off to die, so I'm not sure I was rarely much aware that anything was wrong with their health until they disappeared.

Now these farm pets did not live inside the house with us, so that may be part of the difference, but it did surprise me when I moved to the city and learned how much people spend on taking their animals to the vet.

The point you make is salient. I personally do not have a pet, but wonder if it would be considered inhumane if I had a pet today but "let nature take its course" like we did on the farm 30+ yrs ago?

The price to not "“let nature take its course” in many cases could easily save the lives of 10-20 dogs with a decade plus life expectancy left in third world countries, heck for 3k you could save an actual human child. Its hard to say how that is inhumane.

I am paying cash to treat my dog's carcinoma. I would rather shoot her in the head than deal with an insurance company. Cost isn't really an issue, I literally can't spend enough to offset my gains from options trading, most recently the HTCH acquisition. I don't think I would personally be comfortable owning a dog I couldn't pay for, but having a poor owner is better than being in a shelter for the animal.

For me the challenge is how much to do outside the system in terms of procuring experimental treatments while trying to work with providers who normally work within the system and have capital equipment like the radiation machines. I suppose I could fund research which could get expensive, but things seem OK for now.

A difference probably is that it's easier to pull the plug on a beloved pet than a beloved parent. The vet can put an old ailing pet "to sleep", while the best the hospice can do is palliative care.

This is not good news.

1. How about in other countries?

2. Will a country socialize pet health-care?

3. Vet’s reluctance to put a dog down is one reason that I will not own another dog.

"The authors do not seem to have data on whether cats and dogs live longer in the United States"

I doubt it would be possible to compile that sort of data.

Some years ago one of my mutts, Cookie (so named because I lured her out of the highway with Vanilla Wafers), ran under my truck as I drove up to the barn late at night. I ran over her, breaking her left hip in several places. After her even-later night surgery my vet gave me the bill. $680.
Relieved x 2, I asked why it was so cheap. He showed me the blister pack for the surgical wire mesh and surgical pins that he had used. He said "This comes off the same assembly line as the mesh and wires for people, only they're 1/10th the cost because they were for dogs. I made $300/hr for the surgery so don't worry about me."

Cookie survived and lived a long life. Now, suddenly, the companies have learned that people will pay as much for a doggy surgical pin as they will for the human variety. Solve for the equilibrium.

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