Simple Summary

Affordability to pay for veterinary services is a challenge for some pet owners. The presence of pet health insurance is one tool that can help alleviate this burden. This study surveyed dog owners, seeking out whether the presence of pet health insurance was a factor in dog owners spending more at the veterinarian, as well as having increased visits to the veterinarian. Results show the presence of pet health insurance had a positive association with spending at the veterinarian, but not with veterinarian visits.

Abstract

The U.S. pet population is increasing, but access to veterinary care continues to be a concern. One method of alleviating barriers that prevent access to care is the presence of pet health insurance for a pet. Dog owners were surveyed to see the impact of pet health insurance on dog owners’ visits and expenditures at the veterinarian. Using several models, it was found that pet health insurance had a significant and positive impact on the amount spent at the veterinarian. Other dog and dog owner characteristics were found significant in impacting expenditures and visits at the veterinarian. Findings from this study can help address the accessibility issue facing Americans across the country in obtaining affordable pet care. This research is the first which seeks to identify the driving factors behind dog owners’ choices regarding health care for their dogs.

Keywords: pet health insurance, pet ownership, access to care, OLS, negative binomial regression, multinomial logistic regression

1. Introduction

Pet owners have elevated their pets to an unprecedented level of companionship, treating the pet as a family member, instead of being viewed as property [,,,,,,]. In the United States there are an estimated 63.4 million households that own at least one dog, and 42.7 million households that own at least one cat []. In a pet owner survey by Packaged Facts, 95% of dog owners and 94% of cat owners agreed (strongly or somewhat) that they considered their dogs or cats to be a part of the family []. This is even more so among millennials. In a survey by Weave of 532 millennials, almost 90% of this cohort would put their animal’s life before theirs, and over 90% of millennials care about their pets’ health equally to their own health []. With this high reverence for pets, and the willingness to care for a pet’s wellbeing, the need for pet healthcare is evident. For humans, the U.S. health-care industry has medical insurance to help cover visits and treatments for human healthcare. It is also the same for the pet care industry, but currently a lot less regulated []. Pet health insurance, like human health insurance, helps pay for the costs of treatments that are difficult to foresee in the future []. Policy holders pay a small, known monthly premium to avoid significant financial burdens in the future. However, the presence of an insurance product can sometimes change a consumer’s behavior, such as increasing the number of times one visits the doctor or admitting themselves into a hospital []. It is also seen that pet owners with pet health insurance have a higher tendency to spend more towards the end of a pet’s life (similar to humans with health insurance) []. Veterinarians and the veterinary care team can take on an important role in showing the benefits of pet health insurance for the owner as an option for payment, but also benefiting the veterinarian and practice as well.

In this article we employ several models looking at different characteristics of dog and dog owners to see what impact the characteristics have on a dog owner’s decision to visit and spend more at the veterinarian, as well as decide between euthanasia or choosing for more expensive treatment options. In particular, the presence of pet health insurance is of interest because it can help pet owners afford veterinary expenses that they may not otherwise be able to afford at the onset of a pet crisis, and the veterinarian is able to give the best care the pet needs without economic limitations from the owner. This research is the first which seeks to identify the driving factors behind dog owners’ choices regarding health care for their dogs.

1.1. Pet Health Insurance Awareness

Pet health insurance has been around in the United States since 1980, but the adoption of pet health insurance as a method to pay for veterinary services has been slow to become accepted, unlike other countries such as Canada, the United Kingdom, and Sweden []. In fact, the United Kingdom has a robust pet health insurance industry, and even China has seen growth in pet health insurance [,]. A key reason for the low adoption rate in the United States is the lack of awareness and understanding of pet health insurance among pet owners; however, as more people become aware, the adoption rate of pet health insurance will continue to grow. The adoption rates of pet health insurance in the United States is at 2.3% of dogs (1.7% in 2017), and 0.4% of cats (0.3% in 2017), according to the North American Pet Health Insurance Association (NAPHIA) []. That equates to about 2.15 million pets that were insured in the U.S. at the end of 2018, an 18% increase from the prior year []. Since 2014, the compound annual growth rate in the U.S. is 14.7% and this number continues to grow [].

One way to raise awareness of pet health insurance in the United States as a payment method is through the veterinarian. Past research has shown when pet owners were asked what sources of information for pet care were most important to them, 70% of pet owners said the veterinarian was the most important []. This is a common theme, as a 2016 nationwide pet health insurance study by NAPHIA found that over half of pet owners would purchase pet health insurance if their regular veterinarian recommended it [], and in a consumer preferences survey conducted by the American Veterinary Medical Association in 2015 [], 65% of respondents purchased pet health insurance because a veterinarian recommend it. In addition, 56% of dog owners and 42% of cat owners reported likely, or extremely likely, to purchase pet health insurance in the future if it were recommended by their veterinarians, and 40% of dog owners and 41% of cat owners prefer to buy pet health insurance from a veterinary provider. In Coe, Adams, and Bonnett [], pet owners were interested in learning about pet health insurance from their veterinarian but received little information about pet health insurance as an option to help defray the cost of veterinary care.

1.2. Veterinary Expenditures and Visits

While dog ownership has gained popularity, with over 38% of households owning dogs, the number of visits to the veterinarian, for both dogs and cats, have seen a decline over the years. For example, in 2011, dog-owning households visited the veterinary clinic or hospital about 130.4 million times, an increase of 9% from 2006; by 2016, total visits had fallen to 123.3 million []. While there has been a decline in the number of visits, the average veterinary expenditure per visit has risen from $138 to $161 and has outpaced U.S. inflation; this is due to increased labor costs, rising costs of medical equipment and supplies, and more, all contributing to more expensive veterinary care []. The 2016 NAPHIA study revealed that pet health insurance increased pet expenditures at the veterinarian, as well as increased the number of visits. Specifically, 29% of dog owners and 81% of cat owners spent more per year on veterinary care [].

1.3. Ability to Afford Veterinary Care

While research has looked at factors associated with increased expenditures and visits at a veterinarian, top reasons for a pet owner not bringing their pet to the veterinarian is because the animal was not sick or injured, and because the owner did not have money to pay for it. Interestingly, 5% of pet owners also stated that cost of care was more than they thought it was worth, versus 23% saying they lacked the money to pay for care []. In other words, the issue was less about a lack of perceived value and more about inability to afford veterinary care. A 2019 study by the United Veterinary Services Association revealed that 48% of pet owners are not fully satisfied with the veterinary clinic they go to because of cost/price issues; however, this study also showed that over 95% of cat and dog owners were satisfied with the quality of medical care (excluding cost factors) they received for their pets []. Owners not having money to pay for a veterinary service is an issue. Based on the roughly 30% of pet owners that do not see a veterinarian at least once a year, and the average expenditure per pet, this translates into $7 billion of veterinary care not being delivered to animals. This is a miss for the economic sustainability of the veterinary practice but also for the livelihood of pets []. In these studies, seeking out veterinary services was not a matter of perceived value, but the lack of affordability to pay for those services. One way to alleviate the access to care issue is the presence of pet health insurance.

Affordability of veterinary care was a challenge for both owners and veterinarians in a focus group study by Coe, Adams, and Bonnett []. There was an expectation by pet owners who could and who could not afford expensive veterinary services that veterinarians should offer some type of payment plan to alleviate the upfront cost. From the veterinarian’s point-of-view, working around the client’s budget restrictions is tricky, as they may not be able to offer all the care the pet needs []. In another study by Kipperman, Kass, and Rishniw, economic limitations from clients prevented veterinarians from providing the best care for their client’s pets, resulting in euthanizing pets that could otherwise be saved []. Not only did economic limitations prevent veterinarians from providing the best care for pets, but veterinarians cited euthanasia as a reason for a large level of burnout within themselves. In addition, only about a quarter of veterinarians surveyed discussed pet health insurance as an available option for cost of care before the pets became sick, noting that not having enough time to talk to their clients about pet health insurance was a reason clients were unaware. In addition, in this study, most respondents agreed that clients knowing about pet health insurance would improve patient care, and in addition, reduce burnout (by improving the satisfaction level of veterinarians) [].

2. Materials and Methods

A quantitative research method based on an online survey of pet owners with and without pet health insurance across the U.S. was used to collect dog and dog owner characteristics to measure the impact on the frequency of veterinary visits and expenditures on veterinary pet healthcare. Prior to implementing the survey, the survey instrument was reviewed and approved by the Institutional Review Board for the Protection of Human Subjects in Research (IRB) at Mississippi State University. A nationwide survey of dog owners with and without pet health insurance was launched in January 2017 via email using Qualtrics survey software (Qualtrics Labs, Inc., Provo, UT, USA). Respondents were selected randomly by Qualtrics’s panels and are representative of the general U.S. population. Responses to the questions were screened for inconsistent, illogical, or straight-lined responses, or in instances where the respondent completed the survey too quickly. Information collected included information on the dog owners’ relationships with their pets (whether there is a strong human–animal bond based on where the pet sleeps at night), the available alternatives—pet health insurance (covers unexpected costs, such as bloodwork, surgeries, or cancer treatments) and/or wellness plans (covers routine veterinary care, such as wellness checkups, vaccines, and spaying and neutering; wellness plans can be a part of pet insurance plans or stand-alone) the dog owner has purchased, owners’ attitudes toward risk (major dog illness in the past, perceived future risk of dog illness, and whether a $1000 veterinary bill would cause financial stress), and factors that influence their decisions like sociodemographic characteristics of the dog owner (education, income, age, gender, employment, pet expenditures) and dog (purebred, age, size of dog). With regards to dog owner income, income greater than $55,000 was used as the cut-off point (i.e., dummy variable) because when the survey was administered the median U.S. household income was approximately $55,000. In theory, individuals who make more than $55,000 would be more willing/able to spend a portion of that income on pets and pet-related expenses as their income allows them to spend beyond essential living expenses (rent, food, gas, etc.). Definitions of variables can be found in Table 1. Table 2 reports the summary statistics for these variables.