Policy Documents

A Health Insurance System that Works

May 7, 2012

Around the time Lisa Mulhearn’s Old English Sheepdog, Goober, turned 12, a veterinarian discovered a bone tumor in his nose. The doctors at Red Bank Veterinary Hospital in Tinton Falls, New Jersey, gave Mulhearn a grim prognosis. Without expensive chemotherapy treatment, her dog—the newly divorced woman’s “best friend”—would die a painful death.

But Mulhearn had purchased an insurance policy for Goober. The policy let her stay with her vet, pick whichever hospital she wanted, and decide between treatments ranging from a costly, good-enough-for-humans, pinpointed radiation to older, more-common-for-animals, unfocused treatment. She weighed the options with the care and concern of a deeply worried parent. “The premium treatment would keep Goober at the hospital for the daily treatments—he had been a pet store dog and not the most stable mentally,” Mulhearn explained via email. “Knowing I was doing this to keep him with me, I didn’t want him to spend what could be his last few months at the veterinary hospital. I decided weekly treatments would be best.”
It wasn’t easy. Much of Goober’s fur fell out and his vision failed in one eye. But the treatment worked. The tumor got small enough for doctors to remove. And an insurance policy that cost around $80 a month covered a large chunk of a bill that approached $20,000. Mulhearn, for her part, is thrilled with what she got: “no network requirements, no referrals, no hoops,” she says in describing her insurance. Indeed, Mulhearn, herself covered by an HMO that required everything to go through a “gatekeeper,” jokes that Goober had better health insurance than she did.

The contrast is instructive. The market for pet health insurance is a competitive one that offers many popular, desirable policy features—including many that politicians want to impose on the human health insurance industry. But it’s not perfect. A detailed look at the market, the least regulated broad health benefits system in the country, suggests it would be impossible for the human health insurance system to simultaneously do everything people say they desire, contain costs, and follow purely market principles. This isn’t a reason for free market health care reformers to despair but, rather, a cause for them to be careful about what they promise.