Financial Implications Of ObesityEssay Preview: Financial Implications Of ObesityReport this essayThe increase in the prevalence of obesity in the U.S. has given way to various studies investigating the cost of obesity and related diseases on the general population of individuals, the labor market, and both private and public healthcare costs. Many of these studies focus on using BMI as the index of measurement. Generally speaking a healthy or desirable BMI has a range from 18.9-24.9, an overweight BMI is from 25.0-29.9, and a BMI above 30.0 is considered obese. It has been shown that there is an increased risk for morbidity and mortality with many acute and chronic co-morbid medical conditions such as hypertension, heart disease, diabetes mellitus, respiratory disease, several types of cancer, and arthritis being some of the most common (Burton et. al, 2005; Quesenberry et. al, 1998). These diseases affect an individual who suffers from them on a personal level, but they also have consequences on the labor market and employers who see decreased productivity, as well as financial implications with the cost of health care. The monetary costs of obesity and related disease were estimated to be in between $92.6-$117 billion. These amounts correspond to around 5.7 to 9.1 percent of the total costs of U.S. health care expenditures (Wyatt et. al, 2006). Other studies have indicated that the U.S. has higher costs attributable to excess weight over similarly developed countries. Studies in the Netherlands and France estimated the same costs to be 4% and 2% in these countries respectively (Heithoff et. al, 1997).
The effect of obesity on individuals varies between patients with and without health insurance from a financial standpoint. For people without employer sponsored or government health insurance obesity results in more of a financial challenge, since they bear a larger burden on their premiums or health care costs. In figures collected from different studies by the Centers for Disease Control and Prevention (CDC), it was seen between that between the 1998 Medical Panel Expenditure Survey and National Health Interview Surveys of 1996 and 1997, that out of pocket expenses ranged from $7.1-$12.8 billion (CDC, 2006). Individuals who forgo health insurance or pay for it on their own, also have varying degrees of benefits which may affect their earning potential compared to employer covered workers. Worker absenteeism is often higher for people who are overweight or obese. First Chicago NBD implemented an integrated health data management computer system to study their employees health patterns. In analyzing its data, it was found that there was a correlation between higher BMI and absenteeism (Burton et. al, 1998). When these absences happen the employer may or may not garnish wages to the employee depending on the employment contract. In examining the effects of obesity on individuals it can be seen that obesity is not just a disease where biochemical and physiological elements need to be treated for a person to function, but there are psychological and sociological aspects as well. It has been reported by the National Institute of Diabetes and Digestive Kidney Diseases that $33 billion is spent annually on weight reduction products and services (Anderson et. al, 2003). However in using some of these weight reduction products, individuals may further increase the cost of obesity since some of these products have serious health risks associated with them (Chou et. al, 2002).
Closely linked to the effect of obesity on individuals, is the effect of obesity on employers. Absenteeism not only affects the earning potential of an individual, but it also affects the efficiency and productivity of employers and the market. Examining the costs of sick days versus BMI for the First Chicago NBD data, it was revealed that for those with at risk BMI averaged $1,546 in sick days cost per person. This was in contrast to only $683 for individuals with a BMI that was not at risk for obesity (Burton et. al, 1998). In the U.S. where many employers pay for some part of an employees health insurance, this results in increased rates for insurance. Thus the employer not only gets hit with a cost in the loss of efficiency, but also a further increase in cost of insurance. It has been theorized that in order to balance out these costs, the employer raises the prices that are charged for its products or services to consumers. The result of this is that there is a general decline in disposable income for all sectors of the economy. In turn this further decreases demand across different sectors in a ripple-like action (Anderson et. al, 2003).
The area where most of the literature has focused on concerning obesity and economics is the general trends in the cost of health care and obesity and its related diseases. The CDC calculates that aggregate medical spending attributable to overweight and obesity is around $29.3-$44.5 billion for private insurance and $38.1-$62.1 for Medicaid and Medicare. In the U.S., New York State is the biggest spender on Medicaid for these diseases at $3.5 billion. The next closest state is California which only spends approximately half that amount at $1.7 billion while having a larger share of the countrys Medicaid population (CDC, 2006). Using these estimates, more than half of all health care costs to treat these diseases are paid with public
s. The CDC’s current estimate is that $1.1 trillion in health care spending must be absorbed by Medicare and Medicaid by 2033. In a 2015 report to Congress, the CDC estimated that $12 trillion in the fiscal year 2020 health care spending must be absorbed by federal, state and local governments. As the top ranked states, California also has the biggest share of the nation’s population with the largest portion receiving $10 billion in public health spending per year. And $1.7 trillion per year needs to be absorbed by health care spending by 2030. As recently as 2007 the U.S. spent almost $1.2 trillion on health care
s for the diseases and causes of birth. With this amount, California makes up more than four-tenths of the nations total health care needs. Additionally, California uses to 15% of the population of the nation’s health care expenditures. California’s $0.7 trillion in private insurance expenditures, compared to $4.2 trillion spent the rest of the country’s $11 trillion, is a clear indication that health care spending is growing fast. These trends will also explain why more American women and the elderly will be expected to be obese in 2032 than in 2010. The trend extends beyond California to include other states such as Connecticut, Tennessee and Washington DC. In most of these states, obesity is a major cause of care in the hospital. Even in some of the states which are particularly affluent, the rates vary widely across the state. Here are the top 10 areas where obesity appears to be a major cause of the rising number of admissions to hospital and emergency room. As I wrote in 2002, health insurance premiums are not the only factor that determines the rate at which people are diagnosed with high risk of obesity. Another factor is that the federal government must provide certain health coverage for those individuals who have high levels of obesity. This is done through programs like the American Health Aid Program and the Medicaid program. Another major factor factors in the high rates of obesity amongst current U.S. adults are changes in the transportation of healthcare items. Today’s automobile trips are expensive compared to pre-World War II transport. In many ways, these high cost factors reduce the ability to afford quality of care. But, this same information can be shared with older adults. This means that under the current policy paradigm, there will be only one way to determine what is “good for” a young adult (or a young person if these things are considered “good for” them) while maintaining health care for adults in the age group 35-44 years. These children may be healthier but are less likely to make good social and financial decisions compared to non-young adults. Children and teenagers cannot get to full adulthood on their own without having parents. Parents may have limited understanding of the health care cost. In addition, the higher the age