The good news for the nation's pet owners is that all the dramatic new technological advances helping people live longer and healthier lives can help their furry friends, too. The bad news is that while the family pet can now have that painful hip joint replaced, a heart pacemaker installed or cancer brought into remission with chemotherapy, it's often a costly proposition -- too costly for many families to bear.

So it shouldn't be too surprising that developing almost hand-in-hand with these new and expensive veterinary treatments are a host of ways to help pet owners finance them. Pet medical insurance, once thought unworkable, is finally coming of age, say those developing and selling policies. At the same time, other entrepreneurs are busy trying to prove that the same sort of prepaid "health maintenance organizations" gaining popularity for those with two feet can make sense for those with four.

Santa Ana, California-based Veterinary Pet Insurance (VPI) now has policyholders in 27 states and has processed more than 100,000 claims for 150,000 policyholders since it began in 1982, according to vice president Ron LaCharite. And hoping to be right on VPI's heels is Animal Health Insurance Agency (AHIA) based in Danbury, Conn. AHIA is now approved for sale in every state except New Jersey and Tennessee, according to marketing vice president Christopher Cross. AHIA last summer also earned a coveted endorsement from the American Humane Association, a federation of most of the nation's local animal welfare agencies.

Both companies offer the canine or feline equivalent of "major medical" or "accident-only" insurance. VPI's annual premiums range from $44 to $120 (depending on a pet's age) for its major medical plan, and a flat $24 for accident-only coverage. The plan will insure pets aged 2 months to 11 years and charges a $20 deductible for each illness or injury, after which it covers 80 percent of costs up to $750 per illness and $5,000 per policy per year.

AHIA offers "comprehensive" coverage for pets aged 3 months to 9 years, with a $40 deductible, for $89 annually, after which it pays 70 percent of costs up to $1,000 per illness or injury. Its "catastrophic" coverage, at $36 per year, will pay up to $2,500 per injury or illness, but comes with a $250 deductible. AHIA will insure pets over age 10, but for injury only.

Americans spend an estimated $10 billion on their pets each year, $4.5 billion of that on veterinary care. Yet, according to Guy Hodge, director of data for the Humane Society of the U.S., more than 35 different pet insurance companies have been launched -- and have folded -- since 1945.

The main problem, says Hodge, has been a dearth of "actuarial data," the charts and tables upon which insurance companies must depend to produce a product that clients can afford but will not bankrupt the company.

AHIA's Cross admits that "no one's made a go of {pet insurance} yet," but that things are changing. He points to the success of VPI -- sold directly through veterinarians -- and notes that his plan has two major factors of its own working in its favor. One is that it is underwritten by a major carrier, Virginia Surety Company, a subsidiary of the Chicago-based Combined Insurance Company of America. The other is that the company is using actuarial data provided by England's Equine and Livestock Insurance Company, which Cross says has been marketing similar plans successfully since the 1930s.

A deeper problem with pet insurance plans, says Hodge, is "a mismatch between services provided and what pet owners expect." Both VPI and AHIA, for example, exclude routine preventive care such as vaccinations, preexisting conditions, hereditary and congenital conditions (like the hip dysplasia common to many large dog breeds), and spaying and neutering. The exclusions are necessary, say company spokesmen, to keep the policies affordable and many are similar to those in human health policies.

But most people aren't moved to purchase health insurance for their pets for the same reason they want it for themselves and their families. If a child is hit by a car, for example, no one considers the cost in deciding whether or not emergency surgery should be performed. That's not the case for pets, where euthanasia for the very old, very sick or very injured is often the recommended course of action. "These plans generally are designed to cover catastrophic illnesses, when what most people are looking for are ways to reduce the costs of routine pet care," says the Humane Society's Hodge.

That is where the market comes in for prepaid plans. Such plans, still quite rare, cover, for an annual fee, all of a pet's necessary expenses over the course of a year. For the owner, it makes a pet's health care a predictable expense, while for the veterinarian, it ensures client loyalty, since owners must keep coming back to that practitioner for the duration of the contract, says William Jason Groves of the Rapid City, S.D.-based Pet-i-Caid Corp. Pet-i-Caid provides veterinarians with a blueprint to transform traditional fee-for-service practices into prepaid ones. Groves, however, who is an attorney, says his company is "dormant" at the moment, partly because he hasn't had the time or money to put into marketing and partly due to "the present thinking that insurance can satisfy all needs." Still, he says, "sooner or later a lot of people will come around to this."