Poor health costs $227 billion in productivity losses

The U.S. economy is losing an estimated $576 billion annually due to poor health, according to new research. The Integrated Benefits Institute says employers are paying $227 billion a year in lost productivity alone from poor health.

The San Francisco-based organization calculated the full costs of health and productivity. Using statistics from the Bureau of Labor Statistics, Centers for Disease Control and Prevention, OSHA, and other sources, IBI estimated the following costs due to poor health:

Wage replacement -- $117 billion, including incidental absence due to illness, workers' comp, short-term disability, and long-term disability.
Medical and pharmacy -- $232 billion, including workers' comp, employee group health medical treatments, and employee group health pharmacy.
Lost productivity -- $227 billion from illness-related absenteeism and presenteeism.

"We estimate probably $11 billion is paid out in wage replacement for workers' comp," said Brian Gifford, senior research associate at IBI. "On top of that, we expect about $15 billion is paid in medical payments. That's for medical-only claims and temporary total disability indemnity claims."

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Since the researchers were mainly interested in the costs from a productivity standpoint, the numbers do not include permanent partial disability costs.

The lost productivity costs result when employees are either not at work because of illness or are underperforming because of ill health. IBI based the calculation on a survey done by Harvard researchers for the World Health Organization.

"We use that to correlate how many people have chronic illness and how they differ in performance from those without chronic illness," Gifford said. Those affected work in spite of feeling bad from their chronic illnesses "but not at the level they expect of themselves ... we'd value that at around $164 billion."

IBI officials are hoping the research will prompt employers and political candidates to invest in the health of workers for the sake of the people and the benefit of U.S. business, said IBI president Thomas Parry.

Read more at the WorkersComp Forum homepage.

October 11, 2012

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