Treat Those with Severe Obesity to Save Serious Money

July 31st, 2015 No comments »

Health economist John Cawley and colleagues have published what might be an extremely important contribution to establishing priorities for interventions in the adult obesity population. Their paper, “Savings in Medical Expenditures  Associated with Reductions in Body Mass Index Among US Adults with Obesity, by Diabetes status,” shows that additional  costs associated with increases in body weight are not shared equally but increase exponentially as BMI increases. Likewise, the greatest savings in medical expenditures arise in weight loss among  those with the highest BMI, i.e. persons with Class III  or severe obesity. They write,”The IV model indicates that obesity raises annual medical care costs by $US3,508 per obese individual per year, or $US315.8 billion for the USA as a whole (both measured in 2010 values). The results of IV models are also used to construct detailed tables of the estimated medical care expenditure savings given specific reductions in BMI from specific starting values of BMI; these tables indicate that the savings from a given percent reduction in BMI is greater the heavier the obese individual, and is greater for those with diabetes than for those without diabetes. These estimates of the change in medical care expenditures resulting from weight loss can be used to more accurately calculate the cost effectiveness of interventions to prevent and treat obesity, and can be used by health insurers, employers, and government agencies to determine the societal savings from, and business case for, interventions that generate a specific amount of weight loss.”

Dr. Arya Sharma observes in his post on this paper, “Thus, for e.g. the annual cost savings with a 5% reduction in body weight for someone with a BMI of 30 kg/m2 amounted to a mere $69 per year.

This figure, however, increased exponentially for people with higher BMIs, increasing to $528, $2,137, and $10,030 in an individual with a BMI of 35, 40, and 45 kg/m2, respectively (these figures were somewhat higher, when the individual also has diabetes).

Thus, while treating obesity to achieve a 5% reduction in body weight in someone with a BMI of 30 kg/m2 may never be “cost-effective”, the same amount of weight loss in someone with more extreme obesity, would likely pay for itself or even lead to significant savings.

Because the impact of obesity on mental and physical health, life-expectancy and quality of life is also greatest at higher levels of BMI, one could also make a strong ethical argument for singling out these individuals for priority treatment in the health care system.”

We could not agree more.

Conflict Alert:  I have a great respect for Dr. Cawley’s work on obesity and was pleased to be part of a Point-Counterpoint  debate with him on Employer Wellness programs published in 2014 in the Journal of Policy Analysis and Management.

New Study Pegs Obesity Costs at $300 Billion

June 19th, 2014 No comments »

The Fiscal Times reports on new study from Scott Kahan MD at George Washington University and director of the STOP Alliance estimating costs of obesity at $300 billion.


Read this to understand where we are on obesity

January 15th, 2014 No comments »

If you read nothing else about obesity this year, read this elegant summary of where we stand from John Cawley, Ph.D. of Cornell University.


The Wage Penalty and Obesity

February 7th, 2013 No comments »

Workers who are obese receive lower wages than their non-obese peers, especially white women working in firms which provide health insurance for their employees.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) prohibits employers from varying employee contributions based on health related factors. The current HIPAA provisions provide an exception which allows employers to vary contributions if they participate in employee wellness programs. The proposed regulation under the ACA expands the amount of the penalty/incentive to up to 30% of the cost of the employee’s health insurance premium for those meeting specified biometric targets, including Body Mass Index (BMI) or related weight metric.

Since this provision broadens the exception to the non-discrimination provisions, it is important to consider the extent, insofar as it can be determined of existing discrimination against persons because of their body weight. An expansion of the HIPAA provision should then be read in context of increasing the penalty paid by some employees for their excess body weight.

The justification for the ACA provision was that employees with poor lifestyle behaviors, especially smoking and obesity, should bear more of the employer-paid health insurance costs or demonstrate their efforts in making lifestyle changes in voluntary or mandatory wellness programs. Current research indicates that this premise is not accurate.

So who are most affected by these programs?

The biometrics used in such programs, include obesity, elevated triglycerides and blood pressure, are part of what is known as the metabolic syndrome. Approximately 34% of adults meet the National Cholesterol Education Program’s criteria for the metabolic syndrome. Older males and females from 40-59 years of age are about 3 times as likely as those 20-39 to meet the criteria for the metabolic syndrome. Males and females over 60 were more than 4 and 6 times respectively to meet the criteria. Overweight and obese males were 6 and 32 times as likely as normal weight males to the meet the criteria and overweight and obese females were 5 and 17 times as likely to meet the criteria. (See, Ervin RB, Prevalence of metabolic syndrome among adults 20 years of age and over, by sex, age, race and ethnicity, and body mass index: United States, 2003-2006. National Health Statistics Reports; No. 13. National Health Statistics metabolic syndrome – PubMed Results )

The prevalence of obesity and hypertension has significantly increased in non-Hispanic Whites and non-Hispanic Blacks in both men and women. Non-Hispanic Blacks have the highest prevalence of obesity and hypertension. Diabetes is increasing overall with Mexican-Americans showing the higher rates. Smoking is declining in all groups. Romero CX, et al, Changing Trends in the Prevalence and Disparities of Obesity and Other Cardiovascular Disease Risk Factors in Three Racial/Ethnic Groups of USA Adults. Adv Prev Med. 2012:172423.

It has been long recognized that workers who are obese face discrimination in the workplace in terms of hiring and promotion. Giel KE, et al. Weight bias in work settings – a qualitative review. Obes Facts 2010 Feb;3(1):33-40.

It has also been known for some time that white female workers are paid less than their normal weight peers for the same work. This is known as the wage penalty. See Lempert D, Women’s Increasing Wage Penalties from being overweight and Obese, Department of Labor, Bureau of Labor Statistics Working Paper 414, 2007, December.

The study by Jay Bhattacharya and M. Kate Bundorf of the Stanford University School of Medicine looked at the issue: Who pays the healthcare costs associated with obesity? Using data from the National Longitudinal Survey of Youth and the Medical Expenditures Panel Survey, they made some startling findings:

  1. Workers who are obese and who receive health insurance through their employers earn lower wages than their non-obese peers.

  2. Workers who are obese and at firms not providing health insurance earn about the same as their thinner colleagues.

  3. A substantial part of these wage penalties at firms offering insurance can be explained by the difference between obese and non-obese in expected medical care costs.

  4. The obese with employer-sponsored health coverage bear the full cost of the incremental medical care associated with obesity, approximately $732.

Thus, their study finds that while it is nominally employers who pay for health insurance premiums, it is really employees who bear the cost of employer-sponsored insurance.  Further, the wages of obese workers are lower than those of their normal weight peers, and in the case of white women, the relationship appears to be causal.  It is obese white women who bear the burden of lower wages due in part to the higher costs of insuring these workers. In firms providing employer based health insurance, obese women experience a wage penalty of $2.64 per hour. The penalty comes out to $5,784, above the average individual health insurance premium or 1/3 of a family premium.   In firms which do not provide health insurance, there is no significant wage penalty.

Not surprisingly, men and women with obesity report a higher percentage of common medical conditions, including diabetes, asthma, hypertension, non-specific joint pain and arthritis. Women with obesity are nearly 10% more likely to have arthritis than their non-obese peers, while for men with obesity, the differential is only 6%. It is only for arthritis that obese individuals spend more than thin individuals. They state, “For female workers with arthritis, the medical expenditure difference between obese and thin individuals is $1,956; for male workers with arthritis, the difference is $1,224. Clearly, differences between men and women are an important part of the reason why obese female workers spend so much more on medical care than thin female workers, while obese male workers spend about the same as thin male workers.” The authors calculate the yearly wage penalty on obese women employed in firms providing health insurance is $5,784. Bhattacharya J, Bundorf, MK, The incidence of the healthcare costs of obesity, Journal of Health Economics 2009 May;28(3):649-58.

Two points from this study are critical. First, women with obesity already pay their health insurance premium through a reduction in wages. Thus, a mandatory health contingent program in which the employee is penalized for not attaining an employer determined health metric, such as BMI, actually has the worker paying up to 130% of the health insurance premium. It is this figure which is the true impact of the proposed rule.

Second, the medical conditions of men and women with obesity such as asthma, arthritis, hypertension, etc. can make physical activity difficult or impossible, due to both the physical limitations of such conditions as well as the time and out-of-pocket costs of managing these conditions.

The wage penalty may actually be higher, especially for both men and women at the upper end of the BMI spectrum. In a paper published in 2011, Lisa Powell and colleagues found that a one-unit increase in BMI is directly associated with 1.83% lower hourly wages for women. Late-teen obesity is indirectly associated with 3.5% lower hourly wage for both men and women. Therefore, the wage penalty is significantly larger than previous studies indicated. Han E, Norton EC, Powell LM, Direct and indirect effects of body weight on adult wages. Economics & Human Biology 2011 Dec;4(11):381-392.

The wage penalty may explain the greater perception of employment discrimination among persons with obesity. In one study, results indicate that women are over 16 times more likely than men to perceive employment related discrimination and identify weight as the basis for their discriminatory experience. In addition, overweight respondents were 12 times more likely than normal weight respondents to report weight-related employment discrimination, obese respondents 37 times more likely, and severely obese respondents more than 100 times more likely. Roehling M, Roehling P, Pichler S, The relationship between body weight and perceived weight-related employment discrimination: the role of sex and race. Journal of Vocational Behavior, 71; 2 (Oct 2007);300-318.


US Chamber of Commerce Decries “Coddling” of Employees In Wellness Regs

February 7th, 2013 No comments »

There were three particularly noteworthy comments on the proposed regulations on employer wellness plans.

The U.S. Chamber of Commerce challenged the proposed regulations statement, “A health-contingent wellness program is not “reasonably designed” unless it makes available to all individuals (who do not meet the standards based on the measurement, test, or screening) a different reasonable means of qualifying for the reward.” The Chamber says that this is contrary to the Affordable Care Act provisions. They state, “Wellness programs should not be required to coddle apathetic participants as the Proposed Rule’s pursuit of an “everybody wins” approach will thwart the very motivation that a rewards based program is designed to create.” The Chamber urged that the penalties be raised to 50% for all programs, not just smoking cessation. They also called for “stacking” whereby the penalties would be additive: 50% for not meeting the smoking standard plus 30% for not meeting the other health-contingent plan biometrics or up to 80% of the cost of the worker’s health insurance premium.

Other comments were less harsh. Gloria Sorensen and Deborah McLellan of the Harvard School of Public Health, Center for Work, Health and Well-being, wrote that the wellness programs need to encompass the worksite itself, “Risk factors for cardiovascular disease that may occur at work include exposure to chemicals in tobacco smoke; organizational factors such as work schedules (e.g., long hours and shift work); and psychosocial factors such as high demand-low control work, high efforts on the job combined with low rewards, and organizational injustice,” they wrote.

They note, “Additionally, many traditional wellness efforts have had low participation rates by populations at highest risk for unhealthy eating, smoking, and physical inactivity… such as those in working-class occupations. Such workers may lack the time and energy to engage in these programs, either because the programs are often held during the day when workers cannot attend, or after work when employees many need to leave for another job or family responsibilities. Notably, these populations are also frequently at high risk for exposures to workplace hazards.”

Ted Kyle, writing for the Obesity Society, the Obesity Action Coalition, the American Society for Metabolic and Bariatric Surgery, the Yale Rudd Center for Food Policy and Obesity, the American Institute for Cancer Research, the Academy of Nutrition and Dietetics and Mental Health America, notes that, “there is little evidence supporting the effectiveness of employer BMI and other biometric-based incentives on actually producing sustainable weight loss or lowering healthcare costs…There are many individuals who are not overweight e.g., with a BMI in the ‘normal weight range) who have chronic health conditions such as hypertension, hyperlipidemia, diabetes, or engage in other health risk behaviors. Conversely, there are people who are overweight who are in good health, have healthy nutrition and activity habits, and whose blood pressure and cholesterol are in the healthy range.” The Kyle letter rightly points out that these programs penalize  pre-existing conditions.” The letter recommends employers not use BMI or body size only metrics without consideration of additional health indices and that the employers insurance programs cover evidence-based obesity treatments.

All comments on the proposed regulations can be viewed at


Employer Wellness Incentives Questionable Origin

January 30th, 2013 No comments »

The provision of the Affordable Care Act expanding the amount of the incentive/penalty in mandated health-contingent wellness plans was put forward by Senate Republicans at the urging of Safeway CEO Steve Burd during the 2009 debate over health care reform. Burd launched a whirlwind lobbying campaign claiming great improvements in employee health and lower costs for the company. President Obama embraced the proposal. The Safeway plan, called Healthy Measures, gives employees reduction in their insurance premiums if they are, and stay, within certain limits on four medical risk factors: smoking, obesity, blood pressure and cholesterol. Rebates for achieving the goals total nearly $800 for an employee or $1,600 for a family. People who test within the limits get lower health premiums at the outset of the year. An employee who fails the obesity test can get a retroactive payment if he or she loses 10% of his or her body weight by the end of the year. But if the person’s BMI is still over 30 at the beginning of the following year, the payment is withheld until the employee reaches the permanent goal of under a BMI of 30. (See, Bensinger Gail, Corporate Wellness, Safeway style,  accessed Jan. 29, 2013)

The lobbying campaign has been controversial. In a story titled, Misleading Claims About Safeway Wellness Incentives Shape health-care Bill,” David S. Hilzenrath of the Washington Post, wrote,

It’s a seductively simple solution to rising health care costs. Require workers to pay higher premiums if they flunk tests for measures such as weight, blood pressure and cholesterol. Then, bingo: You not only get a fitter workforce, you slash medical expenses.

Politicians of both parties have embraced that idea and expanded upon in the Senate reform bil, inspired largely by the claims of Steven A. Burd, Safeway’s chief executive. Burd says he as set an example for employers nationwide by rewarding employees for healthy behavior. “Safeway designed just such a plan in 2005 and has made continuous improvements each year,” Burd wrote in the Wall Street Journal. “The results have been remarkable,” he declared, adding that “our health care costs for four years have been constant.”

If only that were true.

In a legislative debate filled with misconceptions, few rival the myth about Safeway, which has become the poster company for a provision that big employers and insurers covet. The supermarket chain’s story show how the untested claims of interest groups can take on a life of their own and shape national policy.

As the House and Senate work to meld their bills, the Senate’s “Safeway Amendment,” which would more than double the potential rewards and penalties tied to wellness tests, has become a point of contention. Business groups have pushed for the increase, arguing that financial incentives encourage workers to take responsibility for their health. Opponents such as the American Heart Association and the American Cancer Society say the provision would undo a central element of reform – the promise that people’s premiums would no longer be influenced by their health status.

Rewarding or penalizing people based on wellness tests may save money over the long run, but Safeway hasn’t proved it. In the meantime, based on 2009 data, if the Safeway Amendment becomes law, American families with average health benefits could have $6,688 a year riding on blood tests and weigh-ins.

But a review of Safeway documents and interviews with company officials show that the company did not keep health-care cost flat for four years. The costs did drop in 2006 – by 12.5 percent. That was when the company overhauled its benefits, according to Safeway Senior Vice President Ken Shachmut. The decline did not have anything to do with tying employees to test results. That element of Safeway’s benefits plan was not implemented until 2009, Shachmut said.

After the 2006 drop, costs resumed their climb, he said…

Today costs are slightly higher than in 2005, Shachmut said.

So, when Safeway said it had flatlined costs since 2005, “we defined that, you might say, loosely,” he said. “Perhaps a more precise way to say it is that our costs today on a per capita basis are essentially the same as they were in 2005.”…

Burd’s assertions about the program’s success made him a rock star on Capitol Hill. He pressed his case in briefings for Senate Democrats and Republicans and in a May meeting with President Obama. Leading policymakers have cited Safeway as a model…

Obama has repeatedly invoked Safeway’s approach. “It’s a program that has helped Safeway cut health-care spending by 13% and workers save over 20% on their premiums,” he said in a June speech to the American Medical Association. “And we are open to doing more to help employers adopt and expand programs like this one.”

When Obama delivered those remarks, the program was less than six months old, and by Safeway’s own analysis the spending in question was on the upswing…

Safeway’s expanded incentives are rooted in a philosophy. “I have no problem with a smoker having a 10-pack-a-day habit an killing him or herself,” Shachmut said. “I mean, it’s a personal choice. It’s a free country. I just don’t want to have to pay the health-care costs of that personal choice.” (Editor’s note: This philosophy might be better grounded if the employer did not set the wages of the individual who is obese or smokes lower than peers in anticipation of extra health care costs. See these comments.)

In accessing the economic impact of incentives, it might be helpful to know who health-care expenses for employees in the voluntary Healthy Measures program with those for the rest of the Safeway workforce. Shachmut declined to provide such information. “We frankly haven’t been disclosing that,” he said. “And I would just prefer not to.” Pressed further, he said the data would not be available until April (2010) or later – long after Congress and the president aim to enact a health-care bill.” Hilzenrath D. Misleading Claims About Safeway Wellness Incentives Shape health-care Bill,” David S. Hilzenrath Washington Post, January  17,2010, accessed Jan. 30, 2013. (Hilzenrath is now editor in chief of the Project on Government Oversight,


Childhood Obesity-Related Hospitalizations Increasing

December 4th, 2012 No comments »

In 2009, there were about 38,000 hospital stays with a diagnosis of obesity for children ages 1 to 17 years in the United States, comprising 2.1 percent of all hospitalizations among this age group. From 2000 to 2009, the rate of hospitalizations with obesity more than doubled (from 2.4 to 5.4 stays per 10,000 children). In contrast, the rate of hospital stays without any mention of obesity remained relatively stable. Hospitalizations with a diagnosis of obesity have a longer average length of stay and higher mean costs per stay. This new report from AHRQ repots a sizable growth in the costs of obesity. In 2000, the average cost of an obesity-related hospital stay was 20 percent higher than a stay with no mention of obesity ($7,200 versus $6,000). But, in 2009, the average cost of an obesity-related hospital stay was 24 percent higher than a stay without obesity ($9,900 versus $8,000). From 2000 to 2009, the rate of stays with obesity on the record more than doubled among children age 5—9 years (up 124 percent), 10—14 years (up 114 percent), and 15—17 years (up 139 percent). During this same period, the rate of stays with obesity increased in all four regions, more than doubling in the Midwest, Northeast, and West.

For both obesity-related and non-obesity related hospitalizations for children there was a marked drop in coverage by private insurance and an increase in coverage by Medicaid from 2000 to 2009.

The principal diagnoses, for which obesity was the secondary diagnosis, were mood disorders, asthma, appendicitis, pneumonia, skin infections, biliary tract disease, diabetes mellitus, epilepsy, attention-deficit, conduct, and disruptive behavior disorders. Report is based on H-CUP databases, sponsored by AHRQ. See AHRQ: Hospitalizations and Obesity Children SB 138

Obesity Related Hospitalizations Soar

December 4th, 2012 No comments »

Obesity-related hospitalizations have tripled from 1996 to 2009. In 2009, there were approximately 2.8 million hospital stays for which obesity was either a principal or secondary diagnosis. The share of obesity-related hospitalizations increased from 3% of all stays (excluding infants and maternal) in 1996 to more than 9% of all stays in 2009. Hospitalizations in which obesity was the principal diagnosis increased 13-fold from 10,100 in 1996 to 132,900 in 2009.  Hospitalizations in which obesity was the secondary diagnosis increased from 766,600 in 1996 to 2,716,200 in 2009, a 3.5 fold increase.

Mean cost per stay for hospitalizations with obesity as a secondary diagnosis compared to no-obesity relationship was 9% higher in 2009 over 2004. Overall, hospital stays with any mention of obesity accounted for $33.4 billion (10.2%) of aggregate hospital costs in 2009.

The most common procedure for which obesity was the principal diagnosis was bariatric surgery, which was unchanged from 2004.

The most common procedure for which obesity was the secondary diagnosis was osteoarthritis, increasing by 27% from 2004. Coronary atherosclerosis was the most common principal diagnosis accounting for 6.8% of all stays in 2004. It decreased 37% to become the third most common diagnosis in 2009. Chronic obstructive pulmonary disease and bronchiectasis increased 34%, rising from the 14th most common procedure to the eighth.

The report is based on HCUP database, sponsored by the Agency for Healthcare Research and Quality. AHRQ: Adult Obesity Hospitalization Statistical Brief 137