More on insurance in the medical profession
In his letter to the editor,1 Dr. Peter W. Farrell has eloquently stated concerns expressed by countless veterinarians across the United States. Nobody wants insurance companies dictating diagnostic or treatment protocols. Nobody wants to be subjected to excessive documentation or waste. Most importantly, nobody wants to be subjected to fee reductions or restrictions.
In the 25-year history of pet health insurance in the United States, these problems have not occurred. Most pet health insurance companies, including Veterinary Pet Insurance, offer an indemnity product. The contractual relationship is between the insurance company and the pet owner. The veterinarian's task is to provide optimal medical care and list all diagnoses so the client can submit a claim. No independence or revenues are lost to the insurance company. The client is reimbursed some portion of the medical fee. It's that simple.
Dr. Farrell is correct that “people must pay for our services out of their own wallets; thus, we have a vested interest in keeping our own costs down.” With 85 percent of their patients insured, physicians lost that cost containment incentive. The restrictions and personal income reductions they are experiencing are the result of physicians losing touch with the patient's ability to pay. Unlike most human patients, however, most pet owners still need financial assistance to help pay for the treatment recommended by their veterinarian.
Dentists have achieved a good balance. With 50 percent of their patients insured through indemnity-type policies, dentists still must be concerned about the affordability of their services. Despite the uninsured patient influence on professional dental fees, US dental incomes are approximately 72 percent higher than have been documented in the veterinary profession.2
Although the JAVMA article3 referenced by Dr. Farrell accurately describes the status of pet health insurance in the United States, a second article4 in the same issue announced that “managed care in veterinary medicine appears to be taking its own shape.” While this managed care plan is not insurance based, the success of the plan depends on enlisting veterinarians to be service providers. The bait is the promise of new clients. But the bait obscures a hook that is the limiting of medical fees to those negotiated by the plan. Network veterinarians must discount their regular fees to plan subscribers. Unfortunately, established clients may also enroll their pets in the managed care plan, and practice revenues will be negatively affected.
Now, for the first time, veterinary medicine is being confronted with a managed care choice. The need to fully understand the difference between indemnity insurance and managed care is urgent. The responses to managed care by the medical and dental professions need to be compared. While the JAVMA articles were a good start, organized veterinary medicine needs to proactively take the lead. The educational process must begin!
Kent A. Kruse, DVM
Veterinary Pet Insurance Co, Brea, Calif
- 1↑
Farrell PW. The effects of insurance on the medical profession (lett). J Am Vet Med Assoc 2007;230: 1302.
- 2↑
US Department of Labor, Bureau of Labor Statistics. Occupational employment and wages, May 2005. Washington, DC: US Bureau of Labor Statistics, 2007.
- 3↑
Burns MK. Pet health insurance gains ground in North America. J Am Vet Med Assoc 2007;230:634–637.
The author responds:
I appreciate the comments of Dr. Kruse of the Veterinary Pet Insurance Co. While the provisions of insurance to ameliorate the cost of a catastrophic illness represent a worthwhile expense, I would ask my colleagues to consider my view.
Our clients have no idea how much it costs to provide services for their pet. They can shop for lower-priced services, but they usually don't. Purchasing veterinary medical services is similar to purchasing human medical services in that there is virtually no shopping and no cost-effectiveness inquiry involved. This is different than shopping for an automobile in which you can compare costs, pick options, and get accurate online pricing information. Your clients agree to pay for your services because they believe in you and you have established rapport, not because they have scrutinized your prices.
Human health insurance freed the consumer from worry about cost and, in fact, made consumers demand unnecessary services in an effort to maximize the personal benefit of their premium dollars. The inflated demand for services created a huge increase in service provision and therefore costs, which were passed on to premium payers. This created a demand for control of premium costs. Managed care and HMOs have been the human side's answer to cost containment. Obviously, that is a complete and utter failure and something we should avoid.
Health insurance allows people to feel that they are not actually paying for their medical service and medications. This is clearly incorrect because their employer is using what could be their salary dollars to pay their health insurance premiums. They just don't think of it that way. On the veterinary side, it is the owners who are paying for the premium, and they may therefore be better, more thoughtful consumers. Still, the lack of connection to the cost of the service, and the interposition of the insurance intermediary, makes it more likely that our veterinary clients will begin the escalation of demand for insurance-covered services that has created the catastrophe that now faces human medical care.
I believe that veterinarians have been good stewards of their clients' dollars, and this has earned veterinarians high public trust and believability. Physicians have divorced themselves from caring what their services cost because they now have to create income not only for themselves, but also for the insurance companies and their shareholders. This is an untenable future, and we will probably live to see the federal government take over human health insurance because of the failure of human health insurance corporations.
The bottom line is that a system that disconnects consumers from direct costs grants them a false sense of getting something for very little. Consumers then demand even more for their money, resulting in a drain on the system that must be paid for by higher premiums, which they will then be angry about. If pet owners simply continue to understand and pay for the services they expect and ask for from their veterinarians, everyone's financial health will be better.
Peter W. Farrell, DVM
The Burnt Hills Veterinary Hospital, PC, Burnt Hills, NY
