Obesity Costs Have Doubled in Less Than a Decade; Employers Urged to Act

Annual medical expenditures attributed to the growing obesity epidemic have doubled in less than a decade, according to a recent study.

Researchers from RTI International, the Agency for Healthcare Research and Quality, and the Centers for Disease Control and Prevention said these costs may now be as high as $147 billion per year.

The study reported that, between 1998 and 2006, the prevalence of obesity (body mass index greater than 30) increased by 37 percent. This increase, researchers said, is responsible for 89 percent of the jump in obesity costs that occurred during this time period. According to the report, obesity is now responsible for 9.1 percent of annual medical expenditures, compared with 6.5 percent in 1998. Researchers noted that an obese person has $1,429 per year more medical expenses -- about 42 percent more costs -- than someone of normal weight.

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"Although bariatric surgery and other treatments for obesity are increasing in popularity, in actuality these treatments remain rare," said Eric Finkelstein, director of RTI's Public Health Economics Program and the study's lead author. "As a result, the medical costs attributable to obesity are almost entirely a result of costs generated from treating the diseases that obesity promotes. Thus, obesity will continue to impose a significant burden on the health care system as long as the prevalence of obesity remains high."

Solid return on investment. To combat rising obesity-related costs, health and safety experts urged employers to develop workplace wellness program. Many executives and business owners, they said, are gradually realizing that programs that help workers lose weight can create robust return on investment.

Speaking at the recent 10th annual Illinois Human Resources Conference and Exposition, Don R. Powell, president and CEO of the American Institute of Preventive Medicine in Farmington Hills, Mich., advised companies to consider how comprehensive a wellness program should be for their company.

"HR managers should consider issues such as maximizing employee participation, involving dependents, teaching wise consumerism as well as online employee wellness programs that manage chronic diseases," he said.

Powell noted that successful employee wellness programs receive an average ROI of $3.48 to $1 due to reduced health care costs and $5.82 to $1 due to reduced absenteeism.

Michael Kelly, director of health and wellness services at HealthCheck360, recommended that companies incorporate health risk assessments into their employee health and wellness programs.

"Health risk assessment can help predict future health care costs beyond mere health claims," he said. "Employee productivity can decrease due to emergent medical needs from chronic illnesses or missed work from longer hospital stays, both of which aren't reflected in direct medical claims."

Adding incentives. Although there are many approaches that employers are taking when implementing workplace wellness programs, a second study found that more companies are turning to incentives to encourage employee participation. The report, by Health2 Resources, surveyed 372 small, medium and large U.S. companies employing 1.8 million workers.

Despite the tight economic times, researchers found that an overwhelming number of employers believed that paying workers to participate in work site health and wellness programs can boost program success and return value. Almost two out of three companies offered programs to keep employees healthy. Of those employers, 66 percent said they used incentives, with a healthy number showing a ROI of greater than $1 for each dollar spent.

"During tough economic times, employees who take control of their health and are more engaged and active in their own health are valuable assets," said Katherine H. Capps, president of Health2 Resources. "We are not talking about $5 here or there. We are talking about serious investment into productivity, made by employers with as few as 200 employees, for as much as $1,400 a year per employee."

Among the key findings of the report, researcher found that:

Program perks vary. The study found that the value of incentives is up, averaging $329 in 2009 and ranging from $1 per pound for weight loss to annual premium reductions valued at more than $1,500. The most commonly used incentive was insurance premium reductions, followed by merchandise/tokens and gift cards.
In addition, researchers found that more employers are offering cash and gift cards to spouses and family members to keep them healthy. More than half of the companies surveyed offered health and wellness or disease management programs to spouses, and one-third extended the programs to other family members.
Confidential health history/questionnaires are crucial. Two out of three employers offered a health risk assessment to workers, and nearly three out of four of those offer incentives to take it. Incentives to take the questionnaire ranged up to $300 annually with about 10 to 15 percent exceeding $300.
Company size matters. Among large employers, researchers found that a bigger percentage offered programs and incentives when compared to small and midsized companies. However, some organizations with as few as 210 employees were offering incentives valued at $1,450 per year to keep employees healthy -- well above the average.
Employers are examining results. The study found that the percentage of companies successfully measuring ROI for health and wellness programs has sharply increased over the years -- from 14 percent in 2007 to 73 percent in 2009.

Read more at the WORKERSCOMP Forum^TM homepage.

August 31, 2009

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