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To The Point

Obesity: Really weighing things down

It's not a personal problem; it impacts everyone

By Michael J. Moody, MBA, ARM

Health care costs in the United States have been increasing for decades. As we all know, there are a variety of reasons for this. The effects of obesity, in particular, are responsible for a significant proportion of these increases.

Before starting any conversation about weight-related topics, it is important to understand some terms that are frequently used interchangeably. These two terms are “overweight” and “obese.” According to the Centers for Disease Control and Prevention (CDC), for adults, “overweight and obesity ranges are determined by using weight and height to calculate a number called the 'body mass index' (BMI).” The CDC indicates that BMI is used because, “for most people, it correlates with their amount of body fat.” For adults who have a BMI between 25 and 29.9, the CDC considers them overweight; while those with BMIs over 30 are considered obese.

Growing concerns

America's waistline has been expanding for quite some time and has been an increasing concern for health care professionals and corporate management personnel alike. But as bad as many people believe the obesity problem is, new estimates on the extent of the problem are certain to cause a stir. Prior estimates have obesity costing around 9% to 10% of national health care costs. However, new research coming out of Cornell University indicates a much higher rate. This study, which appeared in the January 2012 issue of the Journal of Health Economics, reports that the actual number may be around 21%.

What do these new findings translate to in terms of actual costs? According to the study, “An obese person incurs medical costs that are $2,741 higher than if they were not obese.”

Certainly an attention-getting number, to say the least. However, this is only part of the picture; when loss of productivity is factored in, it only gets worse. Productivity losses associated with obesity also are estimated to be higher for obese individuals. The most recent stats suggest that in terms of average work days lost, the obese averaged 183.63 days per 100 employees, compared with 14.19 per 100 for those employees in the recommended weight range.

Obesity also has a significant effect on workers compensation. For the last few years, the National Council on Compensation Insurance (NCCI) has studied the impact of obesity on workers compensation costs. Bottom line: “Work-related injuries are far more costly if the injured worker is obese.” Additionally, the NCCI noted, “Injuries to this group are more likely to result in permanent disabilities.”

A number of other groups have also done similar studies on the impact of obesity on workers compensation costs. For example, a recent study from Duke University notes that “weight challenged workers are twice as likely to file a workers compensation claim as a non-obese worker.” They go on to note that “once the claim is filed, the cost of medical care is seven times higher than claims from non-obese workers.” The Duke study's final analysis is that it is easy to see that the frequency and severity of claims that involve overweight workers is already putting a “tremendous burden on the entire workers compensation system.”

Troubling trend

Many contributing factors account for our expanding waist size. According to the Harvard School of Public Health, “There is no single, simple answer to explain the current obesity patterns in the U.S.” However, they do note that income appears to be a contributing factor. This appears to be borne out by the latest statistics regarding the “fattest states,” as noted by the CDC. For example, Mississippi is the “poorest” state and it is also the “fattest state” according to the CDC, with the highest obesity rate of 34.9%. The CDC study also indicates that states in the South and Midwest, which “in some cases represent the poorest parts of the country, also showed the highest incidences of obesity.” The study goes on to say: “While financial health has a bearing on physical health, the correlation is a complicated one at best.” They conclude that “obesity is clearly not limited to the province of the poor.” But, rather, income is only one of a host of factors that account for these escalating numbers.

Employers, for their part, are becoming painfully aware of the “fat state” trend. A study published recently by the Trust for America's Health and the Robert Wood Johnson Foundation found that “obesity has contributed to a stunning rise in chronic disease rates and health care costs. It is one of the biggest health crises the country has ever faced.” The study points out that obesity rates have jumped, with 38 states now declaring adult obesity rates above 25%. It also notes that as recently as 10 years ago, not a single state had an obesity rate above 20%. In addition, they note that “businesses are reluctant to locate to areas where workplace pools are unhealthy.”

And if the increase in weight was not bad enough, obesity is considered a “gateway condition” because it can lead to numerous other health issues. Frequently, obesity leads to heart disease, diabetes, high cholesterol and hypertension, to name just a few. In fact, the CDC has reported that more than 80% of people with type 2 diabetes are obese or overweight. More recently, the CDC also indicated a direct link between breast cancer recurrence and obesity. Last year, the Red Cross announced that obesity—for the first time—has become the root cause for more deaths than malnutrition.

Addressing the problem

Earlier this year, the Institute of Medicine (IOM) released a comprehensive report that detailed several key strategies that would be needed to address “the dramatic health and financial consequences of obesity.” The IOM stated that nothing less than a focused commitment was required. A summary of their recommendations includes:

• Making physical activity an integral and routine part of life

• Creating food and beverage environments to ensure that healthful food and beverage options are the routine, easy choices

• Expanding the role of health care providers, insurers and employers in obesity prevention

• Making schools national focal points for obesity prevention education

While many groups have advanced recommendations to resolve our nation's weight issue, most of them are long term in their approach and difficult to implement. The IOM suggestions are straight forward and should result in near-term positive results if implemented.


Obesity is chipping away at the U.S. economy. It is increasing the ultimate costs of our goods and services by increasing health care costs and reducing our overall productivity. As a result, the United States will continue to lose ground in the world economy until we can find a way to “tighten our belts.” Obesity in the United States has now become an epidemic. While study after study has shown that there is no one culprit, Obesity in America: An Investor's Perspective says it is all about the three C's, “our cars, our cubicles and our couches.”

The IOM recommendations noted above are a good place to start. And advancements in corporate wellness programs are finally beginning to show promise. Additionally, part of the Affordable Care Act's Prevention and Public Health Fund is designed to provide seed money for local governments to begin weight control programs. However, one course of action that is no longer acceptable is our all too frequent “kick the can down the road” approach to difficult public policy initiatives.

The insurance industry has a vested interest in the outcome of this epidemic and we can assist in working towards a positive outcome. Agents and brokers need to start educating clients about the impact obesity and its concomitant illnesses have on workers comp costs. And while you're at it, put in a good word for wellness programs. Otherwise, if something positive is not done soon, America may be fielding only a team of sumo wrestlers at the Olympic games.

The author

Michael J. Moody, MBA, ARM, retired as the managing director of Strategic Risk Financing, Inc. (SuRF), a firm that had been established to advance the practice of enterprise risk management. As a regular columnist, he continues to actively promote the concept of enterprise risk management by providing current, objective information about the concept, the structures being used, and the players involved.


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