NCPA - National Center for Policy Analysis

Cost of Preventable Illnesses

September 18, 2003

Employer health care costs are rising, leading many firms to consider redesigning their health plans. Much of the expense of health care is due to preventable diseases, according to a new study.

Recent research shows the dramatic impact of chronic, preventable illnesses have on business' bottom line:

  • Obesity-related health problems cost U.S. businesses an estimated $13 billion in 1994, including about $8 billion in health insurance costs, $2.4 billion for sick leave, $1.8 billion for life insurance and nearly $1 billion for disability insurance.
  • Average health care expenditures for people with diabetes run about $13,243 per person, compared with $2,650 per person for people without diabetes.
  • After taking into account differences in age, sex, race and ethnicity, medical expenditures for people with diabetes were 2.4 times higher than comparable people without diabetes.

According to one economic analysis, a health plan's annual costs for covering treatments to help people quit smoking ranged from 89 cents to $4.92 per smoker, while the annual costs of treating smoking-related illness ranged from $6 to $33 per smoker.

HHS spending on disease prevention will total $17.5 billion this year, and the president's budget for fiscal year 2004 calls for an increase to $17.8 billion -- about a quarter of the department's discretionary budget.

Source: "Prevention Makes Common Cents," Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services.

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