Obesity Costs U.S. Companies as Much as $45 Billion a Year

April 15, 2008
The Conference Board said wellness programs to address the issue can get ROI of up to $5 per $1 invested.

Currently, 34% of American adults fit the definition of "obese." The rate of obesity in the U.S. has doubled in the last 30 years, and those extra pounds weigh on companies bottom lines, according to a new report from The Conference Board. Obese employees cost U.S. private employers an estimated $45 billion annually in medical expenditures and work loss.

"Employers need to realize that obesity is not solely a health and wellness issue. Employees' obesity-related health problems in the U.S. are costing companies billions of dollars each year in medical coverage and absenteeism. Employers need to pay attention to their workers' weights, for the good of the bottom line, as well as the good of the employees and of society," says Labor Economist Linda Barrington, Research Director of The Conference Board Management Excellence Program and co-author of the report, "Weights and Measures: What Employers Should Know about Obesity."

Among the report's findings:

  • Obesity is associated with a 36% increase in spending on healthcare services, more than smoking or problem drinking. More than 40% of U.S. companies have implemented obesity-reduction programs, and 24% more said they plan to do so in 2008.
  • Estimates of ROI for wellness programs range from zero to $5 per $1 invested. ROI aside, these programs may give companies an edge in recruiting and retaining desirable employees. Meanwhile, some say it may be more effective just to award employees cash and prizes for weight loss rather than devote resources to long-term wellness programs.
  • Employers need to weigh the risks of being too intrusive in managing obese employees against the risks of not managing them. There is evidence that as weight goes up, wages go down. Employers should be fully aware of any potential discrimination risk before addressing employees weight, whether for the employees own good or that of the company.
  • The jury is still out on the costs and benefits of paying for employees' weight-loss surgeries. While obese employees medically eligible for bariatric surgery (about 9% of the workforce) have sharply higher obesity-related medical costs and absenteeism, some say companies are unlikely to recoup surgery costs before these employees have left for other jobs.
  • How employers communicate a wellness or weight-loss program is as important as how they design it. Companies should involve employees in planning health initiatives, rather than working from the top-down, and should make sure personal privacy is protected.

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