Monday, August 10, 2015

Pet insurance: permission to spend?

Sarah Kliff has a good article about pet insurance that poses the right two questions at the outset -- courtesy of Jennifer Fitzgerald, co-founder of an excellent online insurance market called PolicyGenius:
The first question is the easier one: How much can I afford to spend on my pet? If I got a really expensive bill, maybe something upward of $5,000, would I be able to pay it off myself? If the answer is yes, she says, you might not need pet insurance: You could take a gamble and essentially act as your own insurance company. But if the answer is no, then there's a follow-up question:

How much am I willing to spend to save my pet's life? Don't think about the constraints of your budget for a moment — think about whether you'd think it was worth it to pay $5,000, $10,000, maybe even $20,000 to save your pet's life.
I have been mulling the second question on and off for some years. When we adopted our dear departed beagle mutt Merlin fourteen years ago, I used to joke that he had a $2,000 lifetime health savings account. That was because I was bemused by tales of people paying for cancer operations for their dogs -- $5k or $10k.  I thought that was ridiculous. But changing cultural norms have a tidal pull. When we adopted the beguiling dachshund mutt Walter two years ago, I started testing my mental limits for what I'd be willing to pay down the line -- especially as we read that dachschunds are prone to spinal troubles (we hope the 1/4 pit bull in him may spare him that).

In the intervening years, we'd spent $1000 twice, with several years in between, to have each of Merlin's eyes removed -- he had retinal detachment and had been blind from age one, and they each ruptured at different times. Then, in his last year he developed congestive heart failure, and at the crux we spent about $1,000 on imaging and dog cardiology, then about $80 a month for six months for a drug cocktail that included Viagra (I did love saying "my dog is on Viagra"...). I didn't grudge any of this, but it was raveled out over many years.  Meanwhile, we witnessed the veterinary profession dividing into lucrative specialties and heard more stories about people paying $5k and more for operations.

As Kliff points out, you want to lose insurance bets, and if we insured Walter we probably would ultimately lose money. What I would be buying with pet insurance is self-granted permission to spend what I still rationally regard as a ridiculous amount to keep a pet alive (or mobile). Alternatively I could set that amount aside, mentally or physically (Hey, Congress! I want a tax-sheltered pHSA!) -- but that ain't the same.

Fine print

PolicyGenius is really excellent -- better than any public or private human health insurance marketplace I've visited -- at drilling down to policy details and laying them out clearly, as well as at modeling what you're willing to pay up front as premium and in cost-sharing.  I would offer one caveat, though: insurers may not be equal in their willingness to actually pay claims. You have to see the policy language. Could one insurer deem spinal surgery for a dog who's not paralyzed elective and not covered? The policies rightly get more expensive as the dog gets older -- but do policy terms unequivocally obligate the insurer to  pay for a cancer operation for a ten year-old dog? Before buying, you'd presumably get the policy -- and as with any insurance policy, you'd be well advised to read the damned thing. Slowly.

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