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What medical spending on pets explains about the cost of human health care

If you follow me on Twitter, you’ve probably picked up on the fact I really love two things: health policy and my dog Spencer.

My dog Spencer enjoys the extraordinary growth in American veterinary spending.
(Sarah Kliff/Vox)

So it was especially thrilling to see an economics paper right at the intersection of the two, which uses data about health care to explain why American health care for humans is so expensive.

There is this ongoing debate in economics literature about why we spend more than other countries on medical care — and why our health spending keeps going up. And up. And up.

One argument is that people spend a lot on health care because it’s all heavily subsidized. Most Americans have insurance and, when insurance pays most of the bills, why not consume a ton of health care?

The counterargument that has arisen in recent years is that this isn’t about insurance — rather, when Americans get rich and have lots of money, they want to spend it on medical care that improves their quality of life. If this argument is right, you’d expect to see high health care spending even if Americans didn’t have insurance coverage.

Economists cannot strip Americans of their health coverage for the sake of a research paper. But what economists Liran Einav, Amy Finkelstein, and Atul Gupta were able to do is look at another group that has a health care system but low rates of insurance: pets.

Most American pets don’t have health insurance, which means that their owners foot the entire bill. Even so, spending on pet care has grown really quickly over the past two decades. In fact, it has gone up even more than health care spending.

(National Bureau of Economic Research)

We’re spending more on pet care, so it’s no surprise there are a lot more people working in the pet care sector. The number of veterinarians in America has doubled since 1996. And overall employment in vet clinics is growing, too — once again, faster than employment in physician offices that see human patients.

(National Bureau of Economic Research)

This data suggests that we ought to question the assumption that American health care costs are high because our insurance plans pay most of the bills. America’s cats and dogs typically don’t have health insurance, but they are still racking up incredible bills. This suggests that American pet owners are paying more for care because there are advancements in veterinary technology that we feel it’s worth putting our disposable income toward.

“Insurance is much less common in pet care and government involvement more broadly is not as prevalent,” the authors conclude. “The fact that despite these differences — often mentioned as potential explanations for the large and rapidly growing health care sector in the US — some pet health care patters appear qualitatively quite similar to the analogous human health care pattern strikes us as noteworthy.”

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