Thursday, November 12, 2009

Pet expert: Can humans' health insurance learn from animals'?

health insurance

Got a hedgehog? Kristen Zorbini Bongard does. She loves Harriet so much that she pays $80 a year to Veterinary Pet Insurance (VPI) to protect her from the possibility of a financial "stop-treatment decision"— otherwise known as "economic euthanasia."

This information was brought to you courtesy of Public Radio International's This American Life, where one of last month's segments ("Insurance? Ruh-Roh!") treated the topic in some depth. The preternaturally geeky Ira Glass goes on tape to tell Harriet's tale:

Kristen said that when she found a tumor on her beloved hedgehog, pet insurance helped give her the green light to undertake the expensive treatments to follow. In the end, the insurer, VPI, paid about $800. Kristen and her husband paid $1,900. Despite the inequitable cash outlay, it helped. After all, Kristen is not rich. And she loves Harriet like any of us do our dogs and cats. So if it helped her save Harriet's life, it's a good thing, right?

Yes, of course!

Ultimately, that's the answer This American Life (and the pet insurance industry) is reaching for. Though it hammered the point home somewhat artificially, the idea was this: Pet health insurance helps save pets by raising the stop-treatment bar. What's more, the veterinarians and their businesses and pet owners and their pets all benefit — along with the pet health insurance companies, of course. A "win-win-win!" chants our host along with VPI's CEO. And, best of all, no one loses sight of the ultimate goal or the underlying cost issues along the way.

Human health insurance could take a lesson from animals, Glass concludes.

Amid a roiling sea of convoluted codes, big pharma marketing tactics and layers of bureaucratic billing, human patients get lost. Even more to the point is this: The upward spiraling cost of it all is an outsourced abstraction for the health care providers involved. Docs don't know what any of it costs. And patients are in no position to know any better.

Human health care is undoubtedly a mess. This we know. But to riff on Harriet's dubious success leaves me somewhat cold. How can one hedgehog's 29% pet insurance payout possibly persuade anyone to adopt pet health insurance? It's an embarrassing example that would in no way convince me that I should run to the arms of a pet health insurance carrier in the hopes of saving my pet's life. Indeed, I have no idea how this experience could be considered a win-win-win when it's clear that Harriet's owners were underinsured.

Luckily, there are far better examples of pet health insurance success out there.

But this isn't really about Harriet or her owners, much though This American Life finds it humorous to hold her out as an example of our pet-addled human ways. Rather, for me, it's more to do with how veterinary medicine's fee-for-service, lower-waste ways manage to keep costs under control.

Sure, that cruciate ligament surgery they cited might not seem like a bargain at $3,000, but it's a lot cheaper than the human ACL-tear scenario. In this respect I do agree that veterinary medicine has a lot to teach human health. That's because when veterinarians and pet owners know how much everything costs, and when everyone's a stakeholder in the cost conservation game, smarter decisions get made.

Add to this the fact that 17% of our hospitals' operating expenses don't need to go to the billing department for arcane code translation and chronic insurance carrier disputes, and you have a recipe for an automatically slimmer system.

I'll also agree that giving consumers a choice in their election of insurance carriers and plans makes a big difference to the viability of the entire shebang. Unlike our human system, for which individuals are effectively forced into one company's plan by their employers, pet health insurance offers multiple carriers with multiple plans any owner can choose based on its merits and their personal level of risk aversion. (Not that Harriet's owner had a choice, since only one carrier offers hedgehog insurance.)

Choice is critical when it's obvious that human health insurance carriers use their market share to bully hospitals and skew the game in their favor. If every individual could freely choose a plan without having to worry about belonging to a group to qualify, insurance companies would have to compete based on the quality of their product and the effectiveness of their service. What a concept!

Yes, ultimately the pet health insurance industry has a lot to teach human health … if only because it's based on a competitive, fee-for-service model in which everyone participates, competes and questions costs every step of the way.

Nonetheless, it's unlikely that pet insurance, as it's currently designed, could ever be held up as a model for human health insurance. As Glass concludes in the piece, the difference between pets and humans is responsible for this disconnect. The human-animal divide is vast and lies fundamentally in the willingness of an individual to shoulder any cost, no matter how huge, to save themselves or their children, while the reality is otherwise for pets.

Why? Because most of us consume health care for our pets with the almighty stop-treatment figure buried somewhere inside our very human brains. Like it or not, pets are not like Grandma.