We first give results for Method I which involves apportioning all recurrent health expenditure in 1992-93 among pet owners and non-owners. Method II, for which results are presented later, is based on a more conservative, but in our view less justified approach, in which only costs more directly deriving from GP visits are calculated.
Method I - All Recurrent Expenditure Apportioned
As a worked example, results are given in detail for savings due to main carers of dogs and cats. The assumption here is one of zero benefits to other family members.
A. Savings Due to Health Benefits for Main Carers Only Step 1 - Population Estimates
In 1992-1993, 58% of Australia's 6.08 million households owned a dog, or cat (or both)*. Therefore, there were 3.538 million main carers, i.e. 20.1% of the total population of 17.6 million. 79.9% of the population are assumed not to gain health benefits from being main carers of pets for the purpose of this calculation.
*Morgan Research Data
Step 2 - Doctor Visits per year
Dog and cat owners (20.1%) - 4.41
All others (79.9%) - 5.00
Using these figures, straightforward multiplication indicates that 79.9% of the population makes 81.8% of doctor visits.
Step 3 - Apportioning Health Expenditure
It follows that in our counterfactual situation, annual recurrent health expenditure in 1992-1993 would have been: 81.8/79.9 x $32.922 billion = $33.712 billion
Therefore, savings due to the health benefits flowing to main carers were:
$33.712 billion - $32.922 billion
Savings = $790 million
B. Savings Due to Health Benefits for Main Carers of Dogs and Cats and Their Families
Making an alternative assumption that other family members receive half the health benefits of main carers, the additional savings were: 1.895 million additional family members x 0.5 health benefits x $790 million benefits to main carers = $749 million. Total savings due to main carers and other family members = $1.539 billion. Method II - Savings Derived More Directly from Fewer Doctors Visits by Pet Owners
Our alternative method involves conservative but also perhaps less realistic assumptions. First, this method assumes that when survey respondents told us how many doctor visits they had made in the last year, they reported only GP visits. It should be noted, however, that the relevant survey question asked about visits to "any sort of doctor, your family doctor or specialist". Following from this assumption, the method next involves directly calculating three sets of savings:
1. Savings from fewer GP visits by pet owners;
2. Savings due to assumed lower consumption of pharmaceuticals (prescribed by GPs) on the part of pet owners;
3. Savings due to assumed lower rates of hospitalisation among pet owners.
In making calculations, we assume that the probability of receiving a prescription for pharmaceuticals following a GP visit is 0.9**. The probability of being hospitalised is one in thirty or 0.033***. The probability of these events happening is of course assumed to be the same for pet owners and non-owners.
**Estimated from Dept. of Human Services and Health Statistical Overview, 1993-1994 (1995) Chap 8
*** Estimated from Australian Institute of Health and Welfare data - personal communication
A. Savings for Main Carers Only
Savings for main carers will again be shown in some detail by way of example. Recalling that there are 3.538 million main carers of dogs and cats, we get the following results.
Savings from GP visits: 3.538 million x 0.59 fewer GP visits x $21.44 per visit* = $44.754 million.
*Estimated from Health Insurance Commissioner, Annual Report 1992-1993 (1994). This figure is an underestimate of total costs, since it is the Medicare reimbursement level. In fact only about 60% of GP services are bulk-billed. The remaining 40% of services attract higher charges.
Savings on pharmaceuticals: 3.538 million x 0.59 x 0.9 probability of getting a prescription x $16.73 per script = $31.430 million.
Savings on hospitalisation: 3.538 million x 0.59 x 0.033 probability of being hospitalised x $2,700 cost of the average stay in hospital* = $186.3 million.
Health Insurance Commission Annual Report, 1992-1993(1994)
Total savings: $262.484 million