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Our Planet Money team is looking into health insurance this week, and NPRs David Kestenbaum found a new sector where insurance is just taking off and growing rapidly.

(Soundbite of beeps)

DAVID KESTENBAUM: If you cant tell by all the beeps, this is an operating room. On the table, one of the millions of this countrys uninsured uninsured dogs. For this dog its his second knee surgery. Cost about $3,500 per knee.

This is Chesapeake Veterinary Surgical Specialists in Annapolis, Maryland. In the next room a Weimaraner has been knocked out and is being prepped for surgery. Actually, he's being vacuumed. It turns out when a dog is unconscious, you can vacuum him. Down the hall, dogs with cancer are getting chemotherapy.

And the knee surgeon, Dr. Darren Roa, says not long ago places like this just did not exist.

Dr. DARREN ROA (Veterinarian): The number of surgeons and internists and cardiologists and large mega-practices like this across the country has gotten astronomical. Twenty-five years ago you couldn't find a surgeon without a university. And now there's thousands of them.

KESTENBAUM: So pet health care is crossing that magic threshold that human health care crossed long ago: It's getting good, and it's getting expensive. Only a handful of pet owners that come here have pet insurance. Nationwide its a few percent or so. But the business is growing rapidly, at a pace of 15 or 20 percent a year.

And you wonder if pet health care is about to import one of the major problems with human health care. Costs that go up and up, lots of waste. Because the thing about insurance is once you have it, why not get that extra test done? Its covered. And for the veterinarians, its going to make them more money.

Ms. SUSAN MARKHAM (Veterinary Pet Insurance): Ready for me to go? Good. A big fat thank you from me and VPI for all you do for pets and their peeps every day.

KESTENBAUM: This is Susan Markham who works for Veterinary Pet Insurance, the largest pet insurance company in the country. I tagged along when she made the pitch at a veterinary hospital outside of Atlanta. The staff sat around listening politely, some in scrubs, eating barbecue that the pet insurance company paid for.

She could tell them pet owners who get insurance end up spending twice as much on health care. But she doesn't. She has a much more powerful weapon kittens, a particular kitten named Minnie.

Ms. MARKHAM: Years ago, a young mother and her eight-year-old son brought Minnie in. He was crying. He had stepped on Minnie's leg and it was fractured. And Dr. McCarthy said, Good news, she'll go home with you tomorrow. You won't notice that anything has happened to her six months from now. She'll heal up and be just fine. But sadly, that young mother declined that treatment. Who can tell me why she might have done that?

KESTENBAUM: The story has a bad ending. The owner felt like she couldn't afford to get Minnies leg fixed and overnight took Minnie to be euthanized.

Veterinarians are animal people, and one thing they hate possibly more than anything else is having to kill an animal they can fix, which of course is the upside of insurance: it saves lives.

If youre trying to figure out how you feel about this whole thing, its time to meet someone who actually has pet insurance.

Ms. KRISTEN ZORBINI BONGARD (Pet Insurance Owner): We first noticed that something was up with Harriet in March.

KESTENBAUM: This is Kristen Zorbini Bongard. She lives in Janesville, Wisconsin.

Ms. ZORBINI BONGARD: I was sort of doing some snuggle time with Harriet and noticed that she had a lump.

KESTENBAUM: Before we go any further into the surgeries and the tests, I have to tell you that Harriet is a hedgehog a hedgehog with health insurance. If that seems crazy to you, you do not know Kristen and you do not know hedgehogs. One of the many great things about hedgehogs, she says, is that they can roll up into little balls.

Ms. ZORBINI BONGARD: It's adorable. All of a sudden you see a nose pop out, and two eyes, and maybe the front two paws, and then some ears. It's a very cute thing to watch.

KESTENBAUM: So Harriet had a lump and Kristen brought her into the vet. A test showed the lump was cancerous. Kristen scheduled the date for surgery, the lump came right out, but there were complications. Harriet ripped open her sutures, she had to be stapled shut, and there was a second surgery. And Harriet sometimes still scratched at that spot.

Ms. ZORBINI BONGARD: And so weve had to do some experimenting on her. Shes on some hedgehog and I say hedgehog loosely anti-psychotics.

KESTENBAUM: Meaning theyre not they werent developed for hedgehogs.

Ms. ZORBINI BONGARD: Oh no. And we dont actually know that any other hedgehogs have ever been prescribed anti-psychotics.

KESTENBAUM: Health insurance for a hedgehog costs about $80 a year. Harriet's total bills came to $2,700. The insurance covered most of the early stuff. But in the end Kristen and her husband had to pay about $1,900.

Kristen says theyre not rich. Like a lot of people, they've been cutting back. And she says insurance did change things for her. She spent more on Harriet than she would have without insurance. On the other hand, Harriet's alive.

I wish you had Harriet there. You could bring her up to the phone.

Ms. ZORBINI BONGARD: Oh yeah.

(Soundbite of laughter)

Ms. ZORBINI BONGARD: I could mimic the noise she would make.

KESTENBAUM: Go ahead.

(Soundbite of puffing)

Ms. ZORBINI BONGARD: Thats pretty much it.

KESTENBAUM: To find out what an economist thought of all this, I talked to Tim Harford. He writes a column for the Financial Times called Dear Economist. Okay, Dear Economist, I have a letter that I wrote out here to you.

Mr. TIM HARFORD (Economist): Sure.

KESTENBAUM: Dear Economist: Is health insurance for pets good or bad?

Mr. TIM HARFORD: Like any good economist, Im going to say yes and no. Hows that?

KESTENBAUM: The problem, he says, with pet insurance, human health insurance, theyre all insurance. And insurance separates you from the money youre spending. And he didnt seem consoled by the idea that veterinarians arent driven by profit.

Mr. HARFORD: Well, thats true, but human doctors are reasonable people as well. They're not just in it for the money. I'm sure the money is nice. But they also want to make people better. But we know that doctors are constantly -and vets too - are constantly making these marginal decisions. And if you've got a situation where you're going to make more money ordering tests, the dog's not going to suffer, you know, there's a small chance the dog might even benefit, and it's the insurance company that's going to pick up the tab, well, why not? Why not?

KESTENBAUM: I asked Kristen about the downside of insurance, that it can lead to all kinds of unnecessary tests and procedures. She agreed it could be a problem for certain pets.

Ms. ZORBINI BONGARD: I can see how that could be, especially for dogs or cats. But you know, I guess for me as a hedgehog owner, there's just not that much to do.

KESTENBAUM: Harriet is on anti-psychotics.

Ms. ZORBINI BONGARD: Yes. Yeah, she is. Thats not covered by insurance though. We pay for that out of pocket. I know shes on anti-psychotics. Oh my gosh, I know.

KESTENBAUM: Tim Harford says it's unlikely pet insurance will have the same problems that human health insurance does. The way a lot of plans are set up now, pet owners have to pay a part of the bill, which means they're likely to think twice before getting a test or a procedure done.

And there's another difference. Pet owners, they generally have a limit on what they will spend. But for human health care, when our own lives are in danger, or our wives or our husbands or our kids', we want that insurance company to pull up to the hospital with a huge truck full of money.

David Kestenbaum, NPR News.

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