Jacks View: Managed Care
By Dr. Jack Stephens
Pets Best Insurance President and Founder
Little did I realize in 1978 when I went to the Southern California Veterinary Medical Association with the concept of pet insurance that I would spend the next 30 plus years working to establish pet health insurance in the United States. Today there are 11 pet insurance plans in the U.S. insuring an estimated 1 million pets and reimbursing pet owners over $200 million annually for veterinary care.
Although the market penetration for pet insurance is low when compared to other countries, such as the United Kingdom where over 20% of pets are insured, the U.S. growth is steady. Despite the long recession, the annual growth for pet health insurance is 20%. Prior to the recession, market research conducted by Packaged Facts predicted a 25-35% growth for pet insurance.
While some companies in 2010 experienced little growth or flat sales as compared to the previous year, Pets Best Insurance experienced a healthy 30% annual growth rate. Our company also remained profitable in 2010. To the best of our knowledge, only four of the 11 other US pet insurance companies can make that claim. We attribute our success to both a strong following of veterinary practice referrals, as well as our current policyholders who are exceedingly satisfied with our service and rapid claim reimbursements.
Looking back on the 29 years since founding VPI, it’s important to remind my veterinary colleagues that despite some dire predictions, dog and cat insurance did not migrate to the managed care principals which have been so vilified in human health care.
Myself, along with the 900 other veterinarians who funded pet health insurance had one very specific goal in mind— to provide indemnity insurance to pet owners so they could afford veterinary care. We knew that most pet owners would not save funds for unexpected pet healthcare needs, but they could budget for the care by paying premiums for insurance coverage.
Had we known then the difficulty that was in store in founding pet health insurance in the US, perhaps we would not have pioneered the path that has lead to helping millions of pets and their owners afford the care their pets so desperately need.
From inception we knew that we wanted to avoid certain managed care principals that affected human health care, including:
1. Networks of veterinary hospitals— we wanted to allow pet owners to choose their own veterinarian, not be directed to select sites for services.
2. Fee setting—we wanted to allow veterinarians to set their own fees based on their cost and level of care.
3. Service restriction— we wanted to allow veterinarians and pet owners complete flexibility to determine the best treatment options and procedures based on the owners’ needs, the pets’ condition and the style of practice.
An obvious question might be: Will the next 30 years bring managed care principals into pet health insurance and veterinary medicine?
The answer is in your hands. Managed care in pet insurance and veterinary medicine will not occur, so long as veterinarians opt out of joining networks and refuse to accept restrictions on cost or care.
Veterinarians should support pet insurance, which simply reimburses policyholders for covered services. It’s that simple; support indemnity insurance that reimburses your clients a flat percentage of your treatment costs and avoid discounting, networks or restrictive care to keep the best insurance has to offer.
Certainly there have been attempts to initiate managed care principals in veterinary medicine by Pet Clubs and even one pet insurance plan. However, all have ceased or made little progress since there are good pet health insurance plans available that reimburse 80% after the deductible of actual charges. The old pet insurance company that the 900 of us founded still uses “benefit schedules” which limit reimbursements, however they are the only exception.
Pet Insurance Advantages
With Pets Best Insurance’s flat 80% reimbursement plans, pet owners have nearly 5X the spending power that they may otherwise not have available to them. For example if the most a pet owner could afford to pay for their pet’s treatment is $1,400 before opting for economic euthanasia— with an 80:20 structured plan and a $100 deductible, they could afford $7,000 in care and their out-of-pocket cost would only be $1,480. In this case, pet insurance would have reimbursed them $5,520.
Pet health insurance allows pet owners to budget through affordable monthly premiums, which makes veterinary medicine more affordable. We thank you for recommending Pets Best Insurance to your clients.