Veterinary Spending

Megan McArdle has an interesting post:

Veterinary spending is rising just about in line with human medical spending. Kudoes to AEI for publishing a graph that seriously undercuts one of the major conservative arguments about health care: that the main problem is consumers who don't bear their own costs. Veterinary spending is subject to few of the perversities that either left or right suppose to be the main problems afflicting health care spending. Consumers pay full frieght most of the time. They are price sensitive, and will let the patient die if keeping him alive costs too much. There is no adverse selection. There is no free riding on mandatory care. Government regulation is minimal. Malpractice suits are minimal, and have low payouts. So why is vet spending rising along with human spending?

Two reasons, presumably: technological change and rising income. As we get wealthier, we spend more of our income on former luxuries, like keeping our pets healthy--nineteenth century veterinary care for sick cats consisted of a sack and some stones to weight it down with. And improvements in health care technology are giving us more things to spend that money on. With the help of my family, I bought my dog five extra years of life with an MRI that diagnosed his slipped disk; without it, we'd have had to put him to sleep when he was three. Worth it? I think so. But in 1950, I couldn't have afforded it, even if it had been available.

Interesting for sure, but I'm not sure how much the correlation between the veterinary spending and healthcare spending means. In addition of the total amount spent on veterinary care, I would like see numbers on pet ownership. It's possible that most (but probably not all) is explained by an increase in pet ownership. However, that too may be misleading because if life expectancy of say dogs is increasing that would increase pet ownship becuase people who might not replace a pet would keep one for a long time and some might get a younger one to compensate for an old dog that just sits around.

The AEI post Megan links to is here. And below is the graph she references.


Update: Veterinary Spending Part 2 can be found here.