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Sorting Out The Great Pet V. Human Health Care Debate

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