What obesity costs your business: The importance of healthy incentives

Michael Rivas and Jill Micklow, for Assurance
Published 9:35 a.m. ET Jan. 23, 2017 | Updated 8:39 a.m. ET Jan. 25, 2017

A late-night drive-thru, a quick stop on a road trip, busy families with little time to exercise. Obesity has become an epidemic – especially in the United States, where the convenience of food and lack of time often outweigh healthy habits. What qualifies a person as being “obese?” The short definition of obesity is “an excess amount of body fat,” with a body mass index or BMI of 30 or higher.

How many Americans fit the description? According to the National Institute of Diabetes and Digestive and Kidney Diseases, more than one in three adults are considered obese. To put this into perspective, say you’re working for a mid-size company of 450 employees. According to statistics, about 150 of those employees would likely be obese.

Why obesity matters for businesses

Whether they deem it their job or not, businesses across the U.S. have a vested interest in maximizing the health and wellbeing of their employees. After all, obesity-related spends make up nearly 20 percent of all U.S. medical costs per year and obese individuals spend 42 percent more on healthcare costs, according to the Journal of Health Economics. Increased medical costs are also prevalent in Workers’ Compensation insurance, as those struggling with obesity are more likely to require a longer time to heal away from work.

How do the costs of obese workers compare with their healthier counterparts? According to statistics from Gallup, Duke University Medical Center and StateOfObesity.org, work-related injuries of obese employees are 25% higher, and compensation claims are filed twice as much. The cost of those medical claims are also seven times higher than employees at a healthy weight. Obese employees are also more likely to be absent, averaging ten times more days off for a work injury or illness.

These facts paint a picture of why obesity in America needs to be aided by employers, in partnership with their insurance brokers. Many of these statistics directly relate back to health and workers’ compensation insurance premiums, as well as the indirect costs companies experience. Think of it like an iceberg: Insurance premiums are what you directly see in the top layer, but you also have a number of large, hidden cost factors underneath, like productivity and absenteeism.

How employers currently address obesity

Most businesses are currently focusing on the total health of their employee population in partnership with insurance brokers, through separate and often disconnected safety programs and wellness initiatives. Not unusually, wellness and safety programs operate in silos. Human resources focuses on a wellness program with their employee benefits broker in an effort to lower overall healthcare costs, while a risk management team focuses on a safety program with their business insurance broker to lower workers’ compensation costs. Both areas are working to improve and protect the health of the employees – and in theory, this sounds wonderful. But the model of separation, unfortunately, often comes up short in terms of broad impact.

The separate wellness and safety model often fails to acknowledge that employees with chronic health conditions have more frequent and costly workers’ compensation claims. These issues must be addressed together if real improvement is to occur. By breaking down the silos and integrating these two initiatives, employers will be in a much better position to realize effective and sustainable cost containment.

How to make a combined program successful

Like any initiative, setting long-term and realistic goals is important. Businesses should utilize employee demographics, benchmarking reports and risk exposures to develop goals in partnership with their broker. Make these goals time sensitive, and set key performance indicators (KPIs) to track progress. Example KPIs can include frequency and severity of injury rate or number of days missed, wellness participation rates, BMI score and/or smoking and tobacco use.

As an insurance brokerage, Assurance often stresses the importance of preventative screenings. Studies indicate more than half of all U.S. employers currently offer biometric screening options to employees, but we need more. Think of it like a check engine light on a car. Biometric screenings can set off an early warning signal that something is not quite right. By catching factors that lead to obesity, individuals can be more proactive, further reducing the potential for high medical costs. The HIPAA-compliant, aggregated data can then be used for goal-setting.

Once goals are established, identify and execute custom initiatives. This can be done through an on-site wellness team. Have employees take ownership and provide a clear indication as to how this benefits them individually. One targeted initiative could be implementing 30 minutes of daily activity to help reduce joint pain, depression, anxiety and diabetes in the workforce. The program can include flex and stretch times, walking meetings and participation incentives for wellness and safety activities.

Maybe absenteeism is a problem. As stated, obese workers are absent ten times more than the average employee. Try implementing a weight loss program and track the results of the program against number of days missed due to an injury. This should reduce the long-term cost of workers’ compensation and medical claims.

For reinforcement, don’t forget to create a set brand around your program and its initiatives to keep employees engaged. For example, Assurance integrated an “Eye of the Tiger” theme into their culture and communications.