Byline: Joan Capuzzi Giresi
Trial and error taught Sandy Simpson the importance of a contingency plan. Her first dog suffered from lifelong allergies. Heidi racked up $10,000 in medical bills by the time she succumbed to stomach bloat at age 6.
So when Simpson, a 61-year-old widow, got her next dog, a German shepherd-Lab named Bentley Robert, she bought him pet health insurance when he was 4 months old. A long _ and costly _ list of maladies ensued: The disposable razor he ate as a pup, a bout of salmonella, chronic ear infections, anal gland problems, an autoimmune disorder, abdominal masses ...
'There were times near the end when they talked about putting him down, and then they said, `We could run this test and that.' I said, `Well, let's do it because the insurance will pay a bunch of that money,''' recalled Simpson, who says that even without insurance she would have scraped together her last pennies to treat Bentley.
All told, she estimates she received well over $4,000 in insurance benefits by the time Bentley died in January at 9-{ _ more than recouping her premiums, which she said averaged $150 a year.
Insurance, said Jim Wilson, a veterinarian-turned-business consultant and lawyer who helped build the first pet health insurance company in the United States, is for 'people who love their pets like children but are unlikely to have the $1,000 to $5,000 readily accessible to cover the cost of today's veterinary care.'
The best care, particularly in advanced urban veterinary markets, often means access to the newer technologies and procedures that have become available in the last decade. Big guns such as CAT scans, MRIs, nuclear medicine, radiation therapy, hip replacements and kidney transplants have helped balloon spending from $6.9 billion in 1991 to more than $11 billion this year, the Association of American Veterinary Medical Colleges estimates.
'Veterinary medicine is as sophisticated today as human medicine is,' said Mark Warren, president and chief executive officer of Pethealth Inc., Canada's No. 1 pet health insurer. 'But these advancements come with a price.'
The average dog-owning household's medical expenses jumped from $132 in 1991 to $187 in 1996, according to the American Veterinary Medical Association. At the Veterinary Hospital of the University of Pennsylvania, for example, an overnight stay in either the emergency service or intensive-care unit can run $400 to $500.
A recent case accumulated more than $20,000 in treatment costs during a six-week stay in ICU, before the dog was euthanized for medical reasons. (Had the dog been insured, a portion of the bill might have been covered.)
As in health plans for people, however _ the parallels are many _ issues other than cost play a role in pet insurance.
'We're not just about saving our clients money,' said Jack Stephens, chief executive officer of Veterinary Pet Insurance Co. of Brea, Calif., the oldest and by far the biggest pet insurer in the U.S. 'We're about helping them so they can always get the best care for their pets.'
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I had to put my cat to sleep.
It's a morose refrain we've all heard from grieving friends. But ``had'' can be a loaded word.
Stephens, who is also a veterinarian, said he founded VPI two decades ago to boost access to quality medical care _ and cut down on the rate of economic euthanasia. '`Had' often means that the money was not there today to save their pet,' he said.
Ken Drobatz, director of Penn's emergency veterinary service, frets over the numbers: He estimates that in about half of his emergency cases that are 'put down,' the owner's final decision boils down to money.
The actual amount turns out to be $688 _ the threshold that the average pet owner will spend for a 75 percent chance of successful treatment, according to a recent survey by KPMG L.L.P. Consulting Services in Washington, D.C.
Almost anything that puts a pet in an after-hours emergency clinic runs well into the hundreds or even thousands of dollars. Veterinarian Jennifer Kramer, who owns Animal Hospital of Richboro, a practice in the suburbs between New York and Philadelphia, finds that people usually do not have these cash reserves on hand.
So why do so few pet owners _ under 1 percent, according to an oft-quoted statistic _ have insurance?
Kramer, who recommends policies to every client bringing in a healthy puppy or kitten, said most newcomers to her office have never heard of it. Most veterinarians never mention it.
'One concern we have as a profession,' Kramer explained, 'is the influence of the HMO model. If it ever hit veterinary medicine, it would deteriorate veterinary care, as it has in human medicine.'
The veterinary medical association endorses pet insurance, which some vets believe could provide the firm economic base necessary to preserve the quality of veterinary medical care.
The practice of health insurance for pets began more than 40 years ago in Europe, where fewer regulations make it easier for insurance companies to do business. Over 10 percent of pet owners in the United Kingdom have it, and nearly half of those in Sweden _ where vets often are paid commissions to sell policies _ insure their pets.
But Europeans have not cornered the market on pets. Nearly 60 percent of households in the United States own a dog or cat. The number of lower-maintenance pets _ birds, reptiles, fish, and 'pocket pets' such as rabbits and ferrets _ is growing.
'With the baby-boom generation becoming empty-nesters,' said David Goodnight, VPI's executive vice president of business development, 'we have a feeling they will replace those kids with pets.'
A recent survey by RewardsPlus of America Corp., a Baltimore company that markets and administers benefits packages to employers, found pet insurance to be the third most requested voluntary employee benefit. Pharmaceutical giants Pfizer and Novartis, which produce pet vaccines and products, are supporting the industry.
Given the rising cost of veterinary care and the strength of the human-animal bond, Stephens predicts that the number of insured pets will increase fivefold by 2007. VPI, which expects to sell 275,000 policies this year, estimates that it holds more than 80 percent of the market. Its pet insurance is now offered as part of MetLife's voluntary benefits platform.
The other industry player, Chicago-based PetCare Pet Insurance Programs, owned by Pethealth Inc. of Oakville, Ontario, has written 10,000 policies since entering the U.S. market a year ago. PetCare has marketing alliances with Reader's Digest and the Petco store chain.
The American Kennel Club has entered into a partnership with a British insurer to begin selling policies here next year.
And many smaller pet insurance companies _ classified as property and casualty _ have begun the arduous process of applying for licensure on a state-by-state basis. This is a brave move in an industry where failure has been the rule for rookies: About 30 pet insurance companies have folded in the last 20-plus years.
Despite veterinarians' fears, the industry also has an HMO-type 'insurance alternative.' Pet Assure, based in Dover, N.J., offers a flat 25 percent off all veterinary services _ with no deductibles, exclusions or forms to fill out _ through any of its network veterinarians.
Most pet insurance plans work like those on the human side. Generally, premiums rise with the age of the pet and the frequency of claim submissions. Copayments and deductibles apply, and preexisting conditions are not covered. The pet owner can choose any licensed veterinarian.
Indemnity plans are the rule: The pet owner pays the veterinarian in full, and then submits a claim for partial reimbursement. VPI says its average annual premium for a sick-care policy on a cat is $175. There is a deductible of $50 per incident (or per year for a chronic condition), and the insurer pays up to 90 percent of the balance, depending on the type of plan and the medical condition.
There are also supplemental well-care policies for routine services such as vaccination and teeth cleaning, cancer endorsements, and plans covering birds and exotic pets.
Though VPI covers certain breed-related predispositions _ skin problems in cocker spaniels, for example _ congenital anomalies, hereditary problems such as polycystic kidney disease in Persian cats, elective procedures such as declawing, and behavior disorders are not included.
PetCare's policies are slightly more comprehensive, and they cover congenital or hereditary conditions. PetCare does not offer well-care packages.
So how does all this really work?
Well, insurance claims adjustment can be a gray area. Gary Pave's recent claim _ $440 for surgery, dental work and biopsies for his 5-{-year-old dog's oral mass _ was among the rejected. Pave had purchased his policy, VPI's Superior Plan, for $286 a year, a few weeks after doctors diagnosed Data with an oral mass and gingivitis.
Pave claimed that the original mass had shrunk, and the mass that was removed was diagnosed after the policy went into effect. The company maintained that the mass was part of the same process _ gingivitis _ that was diagnosed before the policy took effect, and therefore was a preexisting condition.
The experience has made a skeptic out of Pave. 'My sense is that these guys push the policies, but they're reluctant to pay the claims,' he said.
When questioned, VPI stood by its decision to deny the claim. Elizabeth Hodgkins, a veterinarian and executive vice president of claims and compliance, estimates that her company rejects only about 8 percent of claims.
Generally, pet insurance clients seem satisfied with their coverage: VPI boasts an 82 percent renewal rate. What's more, said Hodgkins, insured pets are brought to the vet more often and given better medical care than are their uninsured counterparts.
Sandy Simpson agrees.
Just four months after losing Bentley, she brought a greyhound back to her home in Bethlehem, Pa.
Immediately after signing the adoption papers for 2-{-year-old Baxter, she picked up the phone to buy insurance.
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PHOTO (from KRT Photo Service, 202-383-6099): PETINSURE
