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CCH® HR MANAGEMENT — 4/21/06

Obesity affects employee health, workplace bottom line

Obesity is responsible for 2.1 percent of all diagnosed medical claims dollars for men, and 2.8 percent for female employees, according to a study published in the March Journal of Occupational and Environmental Medicine. The study further indicated that the highest obesity-related costs, from employees and their dependents, comes from the healthcare sector, while the lowest obesity-related costs can be found in the finance and consulting sectors.

Researchers point out that the differences by business sector could have as much to do with benefit plan design as health status differences. "Medical costs are dependent on both supply and demand pressures," said Adam Long, PhD, director of Health Management Research, Gordian Health Solutions. "These business sector differences may be driven therefore as much by insurance plan design differences as health status differences." According to the study, healthcare sector members have greater access to care, while financial and consulting sector members are more educated on average, which is a predictor of lower obesity rates.

Of 10 lifestyle health risks considered, obesity was by far the most costly—accounting for approximately 14 percent of lifestyle-related health costs for men, and 25 percent for women. When total costs to the health plan were analyzed, obesity cost $3.55 per member per month (PMPM) for male employees and $5.71 for female employees. Since these figures do not include all prescription drug costs, the true PMPM cost is likely even higher.

Employee obesity costs employers. "Obesity is a risk factor for many chronic diseases," said Long. "Members with chronic diseases account for 80+ percent of the health care cost for organizations, including direct medical and pharmacy expenses, most of which is paid by the employer. Members with chronic disease are also more prone to accidents, which means they cost employers more in worker's compensation and disability claims."

Employers can also expect employee obesity to cost them indirectly through lost productivity due to days absent, as well as lower productivity for those on-the-job (e.g., "presenteeism"). Members with chronic diseases will also pay more out-of-pocket for their medical care. "Overweight and obese employees are clearly affecting employers' bottom line from both direct and indirect cost standpoints," stated Long. Although it is not up to employers to dictate what their employees eat or the amount of exercise they participate in, the bottom line is being affected by what some have called the "obesity pandemic," so it is in the employers' best interests to take some form of action encouraging better lifestyle choices.

For additional information on this and other HR topics, consult CCH Human Resources Management or Personnel Practices/Communications.

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