Is the increase in health care spending mainly coming from the demand side of the market (patients want everything, especially if someone else is paying for it) or the supply side (providers keep inventing new things to do for us)? This question is posed by Robin Hanson who offers this: in the old days, veterinarians were mainly focused on livestock, horses and mules. Today, they’re all into pets. Here’s the distribution of vet employment:
Food animal exclusive 1.8%; Food animal predominant 6.0%; Mixed animal 6.8%; Companion animal predominant 9.7%; Companion animal exclusive 67.2%; Equine 6.0%.
So where is all the increase in spending going? Apparently to the pets:
The average household in the U.S. spent $655 on routine doctor and surgical visits for dogs last year, up 47% from a decade ago, according to the American Pet Products Association. Expenditures for cats soared 73% over the same time frame—on pace with human health-care cost increases. Expenditures for people in the U.S. were up 76.7% between 1999 and 2009, according to the U. S. Centers for Medicare and Medicaid Services.
Hanson concludes, “much, perhaps most, of the rise in animal med spending is a demand effect.”