THE STASH JULY 14, 2009
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This chart from Andrew Biggs at The American showing how spending on human and animal medical care has grown at nearly the same clip has gotten a lot of attention around the web:
The point Biggs wants to bring home is that we shouldn't be looking at the growth rate in spending but the overall level:
Two things are interesting here: first, the rate of growth of spending from 1984 to 2006 wasn’t all that different—and in both cases, spending grew faster than the rate of economic growth. As new technologies are developed for humans, we adopt them for Bowser and Fifi—because we can afford to and we think it’s worth it...
...second, the level of spending was very, very different: we spend hundreds of times more on ourselves than on our pets. The main reason for this is obvious: we value our own lives and those of our families more than we do our pets or other animals. At the same time, however, veterinary care is one of the few areas of health where we are directly confronted with difficult decisions regarding the costs and benefits of additional treatments...
This again highlights that the real issue with healthcare may not be the rate of growth but the level of health spending—and the fact that so much of it seems to be wasteful. ... The level of spending has different causes than the rate of growth of spending, among them our healthcare system’s structural incentives to overspend.
But John Schwenkler at The American Scene thinks the chart could be misleading:
Crucially, it seems clear to me that the numbers should at least be calculated in terms of per capita expenditures, since as it stands we aren’t shown how much of the total growth in each case is due to simple increases in human and non-human animal populations...I’m sure a better number-cruncher than I could use this as an inspiration to put a more revealing chart together – get to work, Conor Clarke!
My name's not Conor, but I'll give it a try. As Biggs points out in a later post, pet data is hard to come by. But one source is the American Veterinary Medical Association (AVMA), which puts out a survey roughly every five years on the pet population in the U.S. going back to 1983. (And possibly earlier, but I couldn't recover earlier surveys.) Using figures from those surveys on the population of cats, dogs, birds, and horses -- which grew from 125 million to 172 million between 1983 and 2007 -- and Biggs' veterinary services spending, I calculated per-capita expenditures for pet care between 1984 and 2006. I did the same for humans and rebased everything to $1 in 1984:
A couple of caveats: First, it's not completely clear whether the surveys took place in the year they were released or the prior year. For the chart, I assumed that the surverys took place in 1983, 1987, 1991, 1996, 2001, and 2006 and the intervening years are simple average annual growth (or contraction) rates that get from one survey year to the next. Second, the chart could be misleading if the costs of dogs, cats, bird, and horse medical care isn't representative of the entire pet population. (Biggs adds some more caveats here.)
But putting those aside, the chart seems to support Biggs' story until about 2001. Afterwards, per-capita spending for human medical care was double the rate of pet care. Meanwhile, the peroid between 1997 and 2007 saw a big spike in the pet population: From 128.5 million to 172.3 million, or 34 percent. If the pet population data from AVMA is relatively accurate, then I suspect we should at least be partially concerned about the rate of growth for healthcare costs, too.
--Zubin Jelveh
6 comments
This strikes me as a decent argument that we aren't spending nearly enough on human health care.
- acria multa
July 14, 2009 at 8:27pm
Congratulations!
That last chart above is now officially the one trillionth chart generated by economists [and veterinarians] since the fall of Bear Stearns.
Talk about out of the blue. A mere month ago you were not even listed in the top ten. Everyone just assumed that Paul Krugman [who, with his dog, held the top five spots] was a cinch to walk away with first prize. His blog is virtually bursting at the seams with charts. In fact, when someone mentioned your name last week at AAC [American Academy of Chartologists] some thought you were Paul's son. Or his cat.
Anyway, this must be particularly satisfying because it marks the first time in years that economists were able to compile more charts than meteorologists or baseball statisticians.
[On the other hand, meteorologists and George Will were quick to point out that their charts actually coincide with the world we live in]
So, keep on chartin'. Sooner or later someone is going to figure out a way to make these chart align with...realty?
Yes, we all live for the day when charts are produced that both liberal and conservative vetenarians can sign off on.
At least I do.
gw
- iambiguous
July 14, 2009 at 8:59pm
Well, if you're a Republican, then this chart could be a useful tool to fight the Obama administration's agenda. Simply put, why is increasing spending the problem, when clearly the answer is to decrease spending on petcare so that more existing reserves are spent on solving human health debts.
I mean, really, who matters more--mom or fido? Just put the dog down and... ummm... put the dog down and.....
Ooh. Nevermind...
- dylanposer
July 15, 2009 at 2:20am
These charts provide an interesting angle on the "moral hazard" argument. Many people argue that health care spending is skyrocketing because insurance makes care too easy to afford. Yet health care spending on pets is also skyrockting, even though almost none of those expenses are covered by insurance. Maybe insurance isn't as big a driver as we thought....
- aces
July 15, 2009 at 7:30am
Aces, the moral hazard problem may or may not play a causal role in rising health care costs, but even if it does, it has nothing to do with health insurance. The moral hazard--or the lack thereof--has more to do with the fact that the primary decision-makers regarding health care purchases are not patients, but doctors, i.e. individuals who have no financial stake in limiting expenditures and may, in fact, have an interest in INCREASING expenditures. This issue applies whether or not patients are insured.
I was a med student and resident at the same large, private, not-for-profit university hospital. I looked after both patients with and without health insurance there, and there was little or no difference in the care that they received. The difference was that after their hospitalization, the uninsured patients were saddled with a fat bill. Despite all that, in my seven years at that institution (8 counting a year of fellowship that I went back for later) never once did a patient say to me, "Let's skip that treatment. I don't want to pay for it." The threat of death turns us all into profligate spenders. No one says, "Better dead than bankrupt."
- aeromonas
July 15, 2009 at 10:23am
The point that seems to be missing here is that veterinary medicine has become the same big business that human medicine is: Patients have become profit centers and selling more services increases the bottom line. As a former cat owner of many years I have witnessed first hand the creep of "services" to justify higher prices. Try to take your cat in for a rabies shot without being charged for an examination and pressured to buy additional services. Try getting your cat a three year rabies vaccination, which costs essentially the same. If you own a dog it is even worse. No vet will see you if you are not buying a package of health care services from him: If you change vets, then no records are transferrable and a whole set of tests is demanded before your animal will be treated. The chart only underscores the following point: We are attacking the problem of how to pay for extending unlimited health care to the entire population while maximizing profits rather the discussing what is the proper health care for the entire population and how should it be provided at a reasonable cost.
- tpinter
July 15, 2009 at 9:42pm