The Cost of Obesity
The obesity epidemic accounts for a growing share of the nation’s health expenditures. U.S. health care costs due to obesity were estimated at $74.2 billion in 1998, or 5.3 percent of all medical spending nationwide. By 2006, these costs accounted for 9.1 percent of annual health costs, or $147 billion (in 2008 dollars).48
A study by Emory University’s Kenneth Thorpe found that per capita health expenditures for the nation’s obese population rose by 63 percent from 1987 to 2001, compared to just 37 percent for the normal-weight population.49 Another study by Duke University economist Eric A. Finkelstein found that average health care spending for obese individuals was 41.5 percent higher than for normal-weight persons in 2006.50
Average health care spending for obese individuals was 41.5 percent higher than for normal-weight persons…
The U.S. Centers for Medicare and Medicaid Services estimated Texas’ total health-related expenditures at $103.6 billion in 2004.51 Assuming these expenditures increased at the U.S. average growth rate, Texas spending reached $130.5 billion in 2008. The Comptroller estimates that adult private employment-sponsored insurance expenditures in Texas comprised nearly 23 percent of this amount, or $29.6 billion.
Obesity costs imposed on Texas businesses have risen since first estimated in the Comptroller’s 2007 report, Counting Costs and Calories. That report estimated obesity-attributable insurance costs at $1.4 billion in 2005 and projected costs of $2.1 billion in 2009. New Comptroller estimates show direct insurance costs to be $4.0 billion in 2009.52
This rise stems from new data on private insurance costs attributable to obesity. Based on Finkelstein’s most recent study, the share of these costs due to obesity rose from 4.7 percent in 1998 to 12.9 percent in 2006.57
This leap greatly increases the Comptroller’s estimate of what obesity costs Texas businesses. Our 2007 report, Counting Costs and Calories, estimated these costs at $3.3 billion in 2005. By applying the 12.9 percent cost share cited above, the Comptroller now estimates total costs to business at $9.5 billion in 2009.
If obesity rates and the Texas work force continue to increase as expected, these direct costs could reach nearly $32.5 billion in 2030 (Exhibit 9).
The total estimate includes cost burdens beyond just direct health care costs.
Total Projected Obesity Costs to Texas Businesses, 2009-2030 (in billions)
Source: Texas Comptroller of Public Accounts.
Nationwide absenteeism costs due to obesity have been estimated at $4.3 billion annually (in 2004 dollars). The costs are more than three times higher for women than for men, at $3.2 billion versus $1.1 billion.58
One 2005 study estimated that productivity losses due to absenteeism represent 30 percent of all direct health costs.59 Applying this distribution to the $4.0 billion in Texas direct insurance costs yields an impact of $1.6 billion in absenteeism costs.
“Presenteeism” describes the lost productivity of employees who are at work but not fully engaged due to health issues or other distractions. The cost of presenteeism is not as tangible as absenteeism, but multiple studies show its adverse effects on work productivity are even greater.60
One study estimated 2003 national costs due to absenteeism and reduced productivity at $42.3 billion, or $1,627 per obese worker. About two-thirds of the costs ($28.7 billion) were associated with reduced productivity at work, with the remainder representing absenteeism.61
By applying this distribution to our estimate of $1.6 billion in absenteeism costs, we estimate that obesity-related presenteeism cost Texas businesses $3.5 billion in 2009.
To determine the impact of obesity on disability costs, the Comptroller’s review team relied on a 2003 study of six large U.S. employers that estimated short-term disability costs caused by conditions commonly associated with obesity. The study attributed 7.7 percent of these costs to obesity.63
The review team applied this distribution to $4.0 billion in direct insurance costs, yielding estimated obesity-attributable disability costs of $321.8 million in 2009.
In all, then, the Comptroller estimates that indirect costs associated with obesity account for 57.5 percent of total obesity-related business health care costs, or $5.4 billion in 2009. Combined with direct health costs, total business costs were $9.5 billion in 2009 (Exhibit 11). The indirect costs used in the calculation make up a smaller portion of overall costs than in the studies cited above, so the Comptroller’s estimate should be considered conservative.
Texas Business Costs Attributable to Obesity, 2009
|Areas of Costs||Estimated Costs||Percent|
Source: Texas Comptroller of Public Accounts.
What Lies Ahead?
The Office of the State Demographer projects that the Texas adult obesity rate will reach nearly 37 percent in 2030 (Exhibit 12).
Given this obesity rate and expected increases in employment, obesity costs to Texas businesses could reach nearly $32.5 billion in 2030.
Projected Adult Obesity in Texas, 1990-2030
Sources: Texas Comptroller of Public Accounts; and U.S. Centers for Disease Control and Prevention (1990-2007); and Texas Office of the State Demographer (2008-2030).
All links were valid at the time of publication. Changes to web sites not maintained by the office of the Texas Comptroller may not be reflected in the links below.
- 48 Eric A. Finkelstein, Ian C. Fiebelkorn and Guijing Wang, “National Medical Spending Attributable To Overweight and Obesity: How Much, And Who’s Paying?” p. W3-223; Eric A. Finkelstein, Justin G. Trogdon, Joel W. Cohen and William Dietz, “Annual Medical Spending Attributable To Obesity: Payer-And Service-Specific Estimates,” pp. w828-w829; and United Health Foundation, the American Public Health Association and Partnership for Prevention, The Future Costs of Obesity: National and State Estimates of the Impact of Obesity on Direct Health Care Expenses, by Kenneth E. Thorpe (Minnetonka, Minnesota, November 2009), p. 3 (Last visited January 6, 2011.)
- 49 Kenneth E. Thorpe, Curtis S. Florence, David H. Howard and Peter Joski, “The Impact of Obesity on Rising Medical Spending,” Health Affairs (October 20, 2004), p. W4-483.
- 50 Eric A. Finkelstein, Justin G. Trogdon, Joel W. Cohen and William Dietz, “Annual Medical Spending Attributable To Obesity: Payer-And Service-Specific Estimates,” p. w826.
- 51 U.S. Centers for Medicare and Medicaid Services, “Health Expenditures by State of Residence: Summary Tables, 1991-2004 (September 2007),” (Last visited January 6, 2011.)
- 52 Texas Comptroller of Public Accounts, Counting Costs and Calories: Measuring the Cost of Obesity to Texas Employers (Austin, Texas, March 2007), pp. 13 and 32 (Last visited January 6, 2011.)
- 57 Eric A. Finkelstein, Justin G. Trogdon, Joel W. Cohen and William Dietz, “Annual Medical Spending Attributable To Obesity: Payer-And Service-Specific Estimates,” pp. w828-w829; and Kenneth E. Thorpe, Curtis S. Florence, David H. Howard and Peter Joski, “ The Rising Prevalence of Treated Disease: Effects on Private Health Insurance Spending,” Health Affairs (June 27, 2005), p. W5-322.
- 58 John Cawley, John A. Rizzo and Kara Haas, “Occupation-Specific Absenteeism Costs Associated with Obesity and Morbid Obesity,” Journal of Occupational and Environmental Medicine (December 2007), p. 1,321.
- 59 Eric Finkelstein, Ian C. Fiebelkorn and Guijing Wang, “The Costs of Obesity Among Full-Time Employees,” American Journal of Health Promotion (September/October 2005), pp. 45 and 50.
- 60 Ronald Loeppke, Michael Taitel, Vince Haufle, Thomas Parry, Ronald C. Kessler and Kimberly Jinnett, “Heath and Productivity as a Business Strategy: A Multiemployer Study,” Journal of Occupational and Environmental Medicine (April 2009), pp. 411-428 (Last visited January 7, 2011.)
- 61 Judith A. Ricci and Elsbeth Chee, “Lost Productive Time Associated with Excess Weight in the U.S. Workforce,” Journal of Occupational and Environmental Medicine (December 2005), p.1,231.
- 63 Ron Z. Goetzel, Kevin Hawkins, Ronald J. Ozminkowski and Shaohung Wang, “The Health and Productivity Cost Burden of the ‘Top 10’ Physical and Mental Health Conditions Affecting Six Large U.S. Employers in 1999,” Journal of Occupational and Environmental Medicine (January 2003), p. 5; and Texas Comptroller of Public Accounts, Counting Costs and Calories: Measuring the Cost of Obesity to Texas Employers, p. 17.