Report: Similar rises in human, pet health care expenses

Household pet health care expenses have risen in patterns similar to those seen in human health care, despite any influences of insurance coverage and public sector reimbursement on the former, according to recent economic analysis.  

The nonprofit National Bureau of Economic Research published the report, “Is American pet health care (also) uniquely inefficient?” in September. Its title is based on a 2008 Journal of Economic Perspectives article, “Is American health care uniquely inefficient?”

The authors of September’s article—Liran Einav, PhD, and Atul Gupta of Stanford University’s Department of Economics and Amy Finkelstein, PhD, of the Massachusetts Institute of Technology’s Department of Economics—wrote that human health care expenses in the U.S. are higher and rising more quickly than expenses in other developed countries without being associated with better outcomes. The rise has been attributed to insurance coverage that shields patients from the costs of their decisions and government reimbursement that provides little incentive for efficiency, the report states.

Similar changes in pet health spending indicate other factors are influencing the demand for and supply of health care, it states.

“It should give us pause before attributing the large and rising healthcare costs in the US solely to the prevalence of insurance and government involvement,” the report states. “The similar growth patterns in US human and pet healthcare may also suggest that technological change in human healthcare may have spillover effects on related sectors, including perhaps pet healthcare or human care in other countries.”

The report compares data collected for the Bureau of Labor Statistics Consumer Expenditure Survey on pet-related expenses, human health care, housing, and entertainment.

The pet-related expenses include categories of veterinary services and pet purchases and medical supplies. Human health care includes insurance premiums and out-of-pocket expenses, and the authors state that housing and entertainment costs were chosen because of their likely correlation with income.

The authors found that housing and entertainment spending had little change from 1996-2012, pet spending rose about 60 percent, and human health care spending rose about 50 percent.

The data show that pet owners with more than $70,000 of annual household income spent more than twice as much on pets than did owners with less than $20,000 annual household income. And the authors indicate the data show a similar pattern for human health care expenses, despite their expectations health insurance would mitigate that connection with income.

Employment data examined by the authors also indicate the supply of people employed in physicians’ offices was 40 percent higher in 2013 than in 1996, and the supply of people working in veterinarians’ offices almost doubled in that time.

The report authors also examined health care expenses on 23 dogs that died of lymphoma at a California pet hospital between 2011 and 2014 and for 125 Medicare patients with lymphoma who died between 2008 and 2011. Both data sets showed an end-of-life spike in expenses, most in the last month for dogs and the last three to four months for humans.

But the authors noted that the pet spending data came from a pet hospital that likely draws clients with higher incomes than typical dog owners.

The report is available from the NBER.