May I help you?

Preventable Risk Factors Account for Large Portion of Employer Health Costs

October 29, 2019

Common Preventable Health Risks and Chronic Conditions:

Chronic conditions such as heart disease, arthritis, diabetes, depression, and musculoskeletal disorders are prevalent in the workplace,  drive health costs and lower productivity. And most importantly, their rates are not decreasing. On the contrary, they are rising,  largely due to the increasing prevalence of predisposing risk factors such as obesity, depression, and inactivity, which also tend to increase with age.  So the current workplace demographics in developed countries consist of aging workers with increasing health risks and younger employees who show significant signs of poor health at an earlier age, due to sedentary lifestyles, poor nutrition, and obesity.

Large studies have documented the risk factors that not only predispose employees to a chronic disease but also drive excess employer health costs. These include obesity,  stress,  tobacco use, depression, poor diet, physical inactivity, blood pressure, cholesterol, blood sugar, and excessive alcohol use. As rates for these health risk factors rise, so do employer costs.

Nearly 1 in 4 Americans have multiple chronic conditions and 50% of the American and Canadian workforce suffer from at least one chronic illness such as diabetes, obesity or heart disease. While some chronic conditions are genetic in origin and outside an employee’s control, too many are due to controllable and preventable risk factors.  A leading preventable risk factor for many chronic diseases, that is reaching epidemic proportions globally, is obesity.  And despite the indicators that obesity is a major risk factor for many costly chronic diseases, like diabetes, high blood pressure, heart disease, and arthritis, it remains highly prevalent globally in both adults and children. Seventy-eight million adults and 12.5 million children are classified as obese in the U.S. Health Canada report that 1 in 4 Canadians over the age of 18 were clinically obese in 2014. Only  40% eat the recommended servings of fruit and vegetables and 25% report a high degree of stress. Smoking and sedentary lifestyles add to the overall burden of chronic disease further driving health costs for employers.

 Preventable Risk Factors Account for Large Portion of Employer Health Costs

 Costs of Poor  Health in the Workplace

The total cost of programs aimed at the health, safety, and well-being of employees is not always clear, yet it is essential information in order to evaluate the relevance, value and potential return on investment  (ROI) for Corporate Wellness.  We know from many studies the direct and indirect costs to employers.  The direct costs (medical and pharmaceutical)  of poor health are approximately  25%  of the total employer health costs. These are often the only costs used in determining the ROI of corporate wellness programs.  As these costs are reasonably easy to quantify.

However, indirect costs  ( absenteeism and presenteeism) make up a significantly larger proportion, at about  75% of the total cost of ill health. Over 50% of North Americans are overweight or obese and similar rates of overweight and obesity have been observed in other developed nations. This is largely a result of poor eating habits and lack of physical activity. Obesity is now considered one of the greatest global health concerns and is strongly linked to diabetes, heart disease, and musculoskeletal problems.  Alcohol, smoking, and stress also contribute to health problems and reduced productivity at work, further compounding the financial burden to employers.

Employee Health Risks and Employer Health Costs

There has been considerable research that shows the relative costs associated with various health risk factors. Furthermore, employer health costs increase over time, as employees get older and the number of health risks increases. This coupled with the natural tendency of individuals to move from low risk to high risk over time, further emphasizes the gap between costs associated with low and high-risk employees.

The positive relationship between the number of health risks and employer health costs has been examined in a number of major studies over the last 3 decades. These studies demonstrated that the higher the employee health risks the higher the employer’s health costs. Furthermore,  two  critical  pieces  of information  were identified:

  1. A list of the employee health risk factors   that drive excess  employer health costs
  2. The data needed to quantify the relationship between these risks and employer costs.

These data are critical in determining the effectiveness and ROI of workplace wellness and can be obtained via an appropriate Health Risk Assessment. The 11 health risk factors found to drive employer health costs are physical activity, alcohol consumption, smoking, job satisfaction, sleep, stress and biometric data on BMI ( body mass index), blood pressure, total cholesterol, HDL (high-density lipoprotein) and blood sugar. These and other relevant information are collected via the Evexia  Health Risk Assessment that quantifies the percent of employees with one or more of these risks, the number of employees in low or high-risk status and the excess health costs associated with these health risks.

The more employees an organization has with high numbers of risk factors, the greater the cost of health care claims, absenteeism and loss of productivity. For example, studies have reported that while employees with 1 health risk (low-risk status)  were absent on average 0.6 days per year, employees with 6 or more risks were absent on average over 3 times as much.  With regards to productivity, employees with 1 risk factor had on average a 2% loss in productivity, while employees with 3 risks had a 7.5% loss and employees with 6 or more risks displayed losses of over  14.5%. Similarly, health claims rise as risks increase. An employee with 6 or more risks costs more than 3 times as much, on average, compared to an employee with 1 health risk factor. In fact, it has been reported that reducing just 1 risk factor, can increase an individual’s productivity on average by 9% and reduce absenteeism by 2%. Clearly, employers pay more for unhealthy employees.  And too often, organizations have larger numbers of employees with 2 to 3 health risks, resulting in higher health costs, compared to a “healthy company”, where the largest proportion of employees has either 1 or 2 health risks and lower overall costs for the employer.


Preventable Risk Factors Account for Large Portion of Employer Health Costs

 

The Economic Impact of Preventable Health  Risks  in the Workplace

Major research studies since the 1990s have documented the economic impact of preventable health risk factors for employers. These studies included thousands of employees of several large U.S. employers followed over a number of years.  A major study published over the last decade ( 2012) matched health spending of 92,486 employees in  7 large U.S. companies over 3 years with a list of common risk factors including high blood pressure, cholesterol and blood sugar, obesity, depression, stress, smoking, poor diet, physical inactivity, and excessive alcohol use.

They reported that these risk factors accounted for  22.4 % of the  $366 million/year spent by the 7 employers and their employees. The combined spending for these health risks resulted in excess medical costs alone of about $887 for each employee/year. Obesity, physical inactivity, depression smoking, and high blood sugar were found to be the top 5 health risk factors contributing the most to excess medical costs, at $347 per employee/year. Furthermore,  the  7  combined health risk factors that contribute to heart disease, obesity,  high stress,  smoking, physical inactivity, and high blood pressure, cholesterol and blood sugar,  increased costs by over 200%.

Depression and high stress resulted in increased costs of over 60%. The health cost for an employee with depression was over $ 2, 100 per year,  48% more than for an employee without depression.  In addition, the  following  risk  factors   resulted  in  higher   health  costs  per employee:

High blood sugar  $1653, high blood pressure   $ 1378, obesity   $1090, physical inactivity  $ 606, smoking   $ 587 and high stress   $343  more compared to employees who did not have these risk factors.

In summary, these are 2012 values and are likely to be lower than today’s figures. However, they confirm that preventable health risks result in significant excess health costs for employers.   Furthermore, health costs continue to rise at unsustainable levels as rates of these preventable health risks continue to rise.  It is clearly time for a change.

  • Companies must   put  in  place health promotion and wellness programs to empower employees  to decrease their risk and adopt  a  healthier
  • Employees must take more responsibility to maintain or improve their health and lower their individual risk of preventable disease.
  • Governments and health systems must  promote  healthy behaviors and encourage employers   to embrace   corporate

Preventable Risk Factors and Employer Excess Health Costs

Families share not only their genes, but also their lifestyle, so it is not surprising that obesity in children is also on the rise. And these will be the obese younger workers, predisposed to chronic diseases at an earlier age, creating a tsunami of “poor employee health that drives costs”.

Request a Demo