economic_cost

Economic Costs

Paying the Price for Those Extra Pounds

Excess weight harms health in many ways. It increases the risk of developing conditions such as diabetes, heart disease, osteoarthritis, and some cancers, to name just a few, and reduces the life span. Treating obesity and obesity-related conditions costs billions of dollars a year. By one estimate, the U.S. spent $190 billion on obesity-related health care expenses in 2005—double previous estimates. (1) The enormity of this economic burden and the huge toll that excess weight takes on health and well-being are beginning to raise global political awareness that individuals, communities, states, nations, and international organizations must do more to stem the rising tide of obesity.

Direct and Indirect Costs of Obesity

Two types of costs are associated with the treatment of obesity and obesity-related conditions:

Direct costs are those that result from outpatient and inpatient health services (including surgery), laboratory and radiological tests, and drug therapy.

Indirect costs, which have been defined as “resources forgone as a result of a health condition,” (2) fall into various categories:

  • Value of lost work. Days missed from work are a cost to both employees (in lost wages) and employers (in work not completed). Obese employees miss more days from work due to short-term absences, long-term disability, and premature death than nonobese employees. (3) They may also work at less than full capacity (also known as presenteeism).
  • Insurance. Employers pay higher life insurance premiums and pay out more for workers’ compensation for employees who are obese than for employees who are not. (4)
  • Wages. Some studies have shown that obesity is associated with lower wages and lower household income. (5)

Indirect costs are harder to identify and measure than direct costs.

Obesity Costs Are Rising Overall

In one of the earliest analyses, Colditz looked at the direct and indirect costs in the U.S. of six common obesity-related conditions—type 2 diabetes, high blood pressure, cardiovascular disease, gallbladder disease, colon cancer, and postmenopausal breast cancer—and determined what percentage of those costs were due to obesity. He estimated that in 1986, obesity was responsible for 5.5 percent of the direct and indirect costs associated with these common medical conditions, or about $39 billion. (3) Subsequent reports on obesity-related medical spending (direct costs) have charted a steady rise in obesity’s cost over the years, as the epidemic has grown. (6)

One widely-quoted estimate from Finkelstein and colleagues, based on data from the U.S. Medical Expenditure Panel Survey (MEPS), found that obesity was responsible for about 6 percent of medical costs in 1998, or about $42 billion (in 2008 dollars). (7) By 2006, obesity was responsible for closer to 10 percent of medical costs—nearly $86 billion a year. Spending on obesity-related conditions accounted for an estimated 8.5 percent of Medicare spending, 11.8 percent of Medicaid spending, and 12.9 percent of private-payer spending.

MEPS is a bit of an underestimate of health care costs, since it doesn’t include people who live in institutions and, in turn, may be in poorer health than the general population. So when Finkelstein and colleagues looked at the “gold-standard” source of health care spending data in the U.S. (the National Health Expenditure Accounts dataset), they calculated that obesity may have been responsible for as much as $147 billion of health care spending in 2006. (7)

More recently, Cawley and Meyerhoefer drew headlines with their estimate that obesity accounts for 21 percent of medical spending—$190 billion in 2005—more than double Finkelstein and colleagues’ earlier estimate from MEPS data. (1) Cawley and Meyerhoefer also used MEPS data to make their estimates. But they used a different and potentially more accurate method for calculating costs, called the “instrumental variable approach.” This method takes into account the two-way relationship between obesity and chronic disease, by using a biological child’s body mass index as a surrogate variable for the individual’s body mass index.

Looking ahead, researchers have estimated that by 2030, if obesity trends continue unchecked, obesity-related medical costs alone could rise by $48 to $66 billion a year in the U.S. (8)

Countries with lower obesity rates than the U.S. spend a smaller share of their healthcare dollars on obesity, but the burden is still sizable. (9) (See table, A Snapshot of Obesity-Related Costs.)

Calculating Obesity Costs per Person

Several investigators have evaluated the cost of obesity on an individual level. Finkelstein and colleagues found that in 2006, per capita medical spending for obese individuals was an additional $1,429 (42 percent higher) compared to individuals of normal weight. (7) Cawley and Meyerhoefer, meanwhile, found that per capita medical spending was $2,741 higher for obese individuals than for individuals who were not obese—a 150 percent increase. (1)

Thompson and colleagues concluded that, over the course of a lifetime, per-person costs for obesity were similar to those for smoking. (10) In middle-age men, treatment of five common obesity-related conditions (stroke, coronary artery disease, diabetes, hypertension, and elevated cholesterol) resulted in roughly $9,000 to $17,000 higher costs compared to normal-weight adults.

The Bottom Line: Prevention Is Key to Trimming Obesity’s High Costs

It is possible that a clearer understanding of the cost of obesity will spur larger and more urgent programs to prevent and treat it. While the U.S. has made some investments in prevention, with the First Lady’s “Let’s Move” initiative and Communities Putting Prevention to Work, these efforts represent relatively small steps forward, and future public health prevention funding remain under threat. To make true advances, these initiatives should be part of concerted efforts by local and national governmental, health, and nonprofit organizations, food companies, advertisers, and individuals to make healthy weights the norm rather than the exception.

Read more: obesity prevention recommendations for families | schools | early child care | worksites | health care | healthy food environment | healthy activity environment

References

1. Cawley J, Meyerhoefer C. The medical care costs of obesity: an instrumental variables approach. J Health Econ. 2012; 31:219-30.

2. USDA Economic Research Service. Food Safety Glossary. Accessed January 25, 2012.

3. Colditz GA. Economic costs of obesity. Am J Clin Nutr. 1992; 55:503S–507S.

4. Trogdon JG, Finkelstein EA, Hylands T, Dellea PS, Kamal-Bahl SJ. Indirect costs of obesity: a review of the current literature. Obes Rev. 2008; 9:489-500.

5. Colditz GW, Wang, YC. Economic costs of obesity. In: Hu F, Obesity Epidemiology. New York: Oxford University Press, Inc., 2008.

6. Dor AF, Langwith C, Tan E. A heavy burden: The individual costs of being overweight and obese in the United States. The George Washington University School of Public Health and Health Services Department of Health Policy, 2010.

7. Finkelstein EA, Trogdon JG, Cohen JW, Dietz W. Annual medical spending attributable to obesity: payer- and service-specific estimates. Health Aff (Millwood). 2009; 28:w822–31.

8. Wang CY, McPherson K, Marsh T, Gortmaker S, Brown M. Health and economic burden of the projected obesity trends in the USA and the UK. Lancet. 2011; 378:815-25.

9. Withrow D, Alter DA. The economic burden of obesity worldwide: a systematic review of the direct costs of obesity. Obes Rev. 2010. DOI: 10.1111/j.1467-789X.2009.00712.x.

10. Thompson D, Edelsberg J, Colditz GA, Bird AP, Oster G. Lifetime health and economic consequences of obesity. Arch Intern Med. 1999; 159:2177–83.

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The aim of the Harvard School of Public Health Obesity Prevention Source Web site is to provide timely information about obesity’s global causes, consequences, prevention, and control, for the public, health and public health practitioners, business and community leaders, and policymakers. The contents of this Web site are not intended to offer personal medical advice. You should seek the advice of your physician or other qualified health provider with any questions you may have regarding a medical condition. Never disregard professional medical advice or delay in seeking it because of something you have read on this Web site. The Web site’s obesity prevention policy recommendations are based primarily on a review of U.S. expert guidance, unless otherwise indicated; in other countries, different policy approaches may be needed to achieve improvements in food and physical activity environments, so that healthy choices are easy choices, for all.