While states across the nation grapple with national health care reform, a new population of patients is gaining attention in California: Fido and Fluffy.
Many feline and canine companions face health care challenges similar to those that confront humans. Veterinary care costs are skyrocketing as pet owners are offered a sophisticated menu of potentially lifesaving services, including kidney dialysis, sonograms and chemotherapy.
U.S. consumers spent more than $12 billion on veterinary care in 2009, according to The American Society for the Prevention of Cruelty to Animals.
Few have health insurance for pets
Yet only about 1 percent of pet owners have health insurance for their animals. Those who do often don't understand what the policy covers and what it excludes in an industry that has faced little regulation or even attention — at least until now.
Democratic state Assemblyman Dave Jones, who is running for state insurance commissioner in the November election, said some of the same practices being corrected by the recently enacted federal health care overhaul are used by pet insurance companies, including denying coverage based on pre-existing conditions.
Jones has introduced a bill that would make pet insurers post detailed information on their websites so consumers can see exactly what is covered and what is not. They could then compare options, just as if they were buying insurance for themselves in a post-health reform world.
"A number of pet owners have complained to me that they bought a policy, and they weren't told about pre-existing conditions," said Jones, who has two cats, Dragon and Blanca. He said others have attempted to buy policies but were told that because of pre-existing conditions in their pet, they couldn't get pet insurance.
The bill also would mandate that an insurer disclose whether it will reduce coverage or increase premiums based on claims filed in the preceding policy period.
According to pet insurance companies and animal advocacy groups, Jones' effort is the first of its kind in the nation. The bill passed the state Assembly and a Senate insurance committee. It currently awaits hearing before the Senate Appropriations Committee.
Pet insurance varies widely depending on the company selling the policy. Just as with human health insurance, policy holders pay monthly premiums. Most pet policies require owners to pay the bill in full and submit a claim to the insurance company for partial reimbursement.
That's where confusion can comes in. Many policies state they will reimburse policy holders a percentage of reasonable and customary costs, but pet owners say veterinary charges can far exceed what the insurer considers reasonable.
"The time when you figure out how your insurance works is when you are in the throes of an emergency," said Jennifer Fearing, senior state director for the Humane Society of the United States.
That was the case for Gary Lucks, whose dog Bodie was diagnosed with cancer at age 10. Lucks spent about $5,000 on Bodie's diagnosis and treatment. He expected to be reimbursed about 85 percent of the cost, but said he was paid back only about one-third.
"It was just an outrage," Lucks said.
Lucks, an environmental lawyer who lives in Oakland, wrote a complaint to the company and eventually was paid the 85 percent reimbursement. He then took the money and paid his research staff to write a policy paper and asked state lawmakers to take a closer look at the industry.
"There needs to be full disclosure, so the unwary consumer is aware of what they're paying and what they're getting," Lucks said.
In addition to making each company list those details prominently on its website, Jones' bill would add pet insurance as a separate line in the state insurance code.
In California, like most states, pet insurance is included in the miscellaneous category of property and casualty insurance. By making it a distinct coverage area, proponents hope consumers will be able to more easily research complaints against providers.
Website seeks to help
One tech-savvy pet owner, Michale Hemstreet, stymied by the variety of pet insurance options, created a website, www.petinsurancereview.com, where customers can compare veterinary insurance plans and write reviews. He said the website has about 35,000 visitors per month.
On the site, one pet owner complained that although she had been paying for ongoing pet insurance for her cat, the insurance company refused to renew her cat's policy after it developed hyperthyroidism, calling it a pre-existing condition. Hemstreet said some companies consider a health issue pre-existing if it developed in the previous year, regardless of whether the pet was covered at the time.
Jones' bill initially sought to ban pet insurers from denying coverage due to pre-existing conditions. But the pet insurance industry pushed back, saying the provision would make coverage more expensive for everyone.
"The problem with that is that nobody would buy pet insurance until their pet gets sick," Hemstreet said.
Stripping the provision from the bill prompted Veterinary Pet Insurance (VPI), the nation's largest pet insurer, to support the legislation. It also is backed by the ASPCA and the Humane Society.
The bill will help transparency in the industry, said Curtis Steinhoff, spokesman for VPI. "We'd rather have people know what they're purchasing so that they're not surprised when they go to use it."