A Look at the Health Conditions Driving Employer Healthcare Costs

You’re always seeking ways to keep your healthcare costs in check. One of the best ways is to understand what’s driving your costs. The International Foundation of Employee Benefits Plans (IFEBP) asked 500 employers to name the top 3 conditions driving costs (see table below).

Top 10 Conditions Driving Employer Health Costs
Rank Condition % of Respondents
1. Diabetes 41%
2. All Cancers 33%
3. Arthritis/back/musculoskeletal 32%
4. Obesity 29%
5. Heart disease 27%
6. Hypertension/high blood pressure 26%
7. Depression/mental illness 20%
8. High cholesterol 11%
9. Smoking 9%
10. High-risk pregnancy 4%

Source: IFEBP Workplace Wellness Trends 2017 Survey

 

Here’s a quick look at how and why these conditions impact not only your healthcare costs, but your bottom line.

Diabetes

Key Facts

  • 3 million Americans (9.4%) have diabetes.
    • 5 million are newly diagnosed each year.
  • Nearly 75% of those with diabetes are under age 65, meaning they are covered under employer health plans.
  • 2 million hospital discharges for adults age 18+ listed diabetes as one of the diagnoses.
  • 2 million emergency room visits listed diabetes as one of the diagnoses.

Cancer

 Key Facts

  • Cancer survivors projected to be alive in 2020: 18.1 million:
  • Cancer survivors continue to feel the economic impacts from cancer well after they’ve completed their treatment (Journal of Clinical Oncology).
  • About 1.7 million new cancer cases are expected to be diagnosed in 2018 (org).
  • Americans projected to die from cancer in 2018: 609,640.
  • Cancer is the:
  • #1 cause of long-term disability
  • #5 cause of short-term disability (Unum).

 

Source: CDC’s National Diabetes Statistics Report, 2017

Read my previous blog, Poor Health Increases Disability and Workers’ Compensation Costs, to learn more.

Cancer Costs

  • Projected national cost of cancer care by 2020: $157 billion, in 2010 dollars (National Cancer Institute).
  • Productivity losses associated with recently diagnosed cancer survivors, aged 18-64: $3,593 (Journal of Clinical Oncology).
  • Estimated losses from employment disability, work days missed, and lost productivity:
  • $9.6-$16 billion for survivors aged 18-64
  • $8.2 to $10.6 billion for survivors aged 65+.

Arthritis/Back/Musculoskeletal

Key Facts: Arthritis

  • Osteoarthritis, the most common type of arthritis in the US, affects more than 30 million adults in the United States.
    • It is one of the most expensive conditions to treat when joint replacement surgery is required.
Source: National Cancer Institute

2013 Arthritis Costs (CDC)

 

  • Total national arthritis-attributable medical costs: $140 billion.
    • That’s $2,117 in extra medical costs per adult with arthritis.
  • Total national Osteoarthritis-attributable medical care costs: $16.5 billion.
  • Cost of hospitalizations for privately insured patients: $6.2 billion.
  • Total national arthritis-attributable lost wages: $164 billion.

Musculoskeletal Disorders (MSDs)

Musculoskeletal Disorders MSDs are injuries and disorders that affect the human body’s movement or musculoskeletal system (i.e., muscles, tendons, ligaments, nerves, discs, blood vessels, etc.).

Key MSD Facts

  • Number of injuries cause by MSDs in the American workplace each year: 400,000.
    • They are the leading cause of pain, suffering, and disability.
  • Percentage of workers’ compensation cases caused each year: 33%
    • MSD cases require 38% more lost time days than the average injury/illness.
Source: CDC

Key MSD Costs

  • Estimated total costs of MSDs each year: $45-54 billion.
  • Direct costs of MSDs each year: $20 billion.
  • Indirect costs (lost productivity, product defects, etc.) of MSD: 5 times higher than direct costs.
  • Additional sales your company needs to generate to cover $260,000 in MSD:$8 million.

Source: Ergonomics Plus

Obesity

Key Facts

  • 70% of all Americans are overweight or obese:
    • 40% of adults are obese
    • 18.5% of children between the ages of 2-19 are obese. This includes:
      • 10% of preschoolers aged 2-5
      • 5% of adolescents aged 12-19 (CDC).

Obesity Costs

  • Costs range from $147-$210 billion per year.
  • Absenteeism costs employers $43 billion annually.
  • Productivity losses cost employers $506 per obese worker per year (org).
  • Childhood obesity alone is responsible for $14 billion in direct medical costs. Obesity-related medical costs in general are expected to rise significantly, especially because today’s obese children are likely to become tomorrow’s obese adults (Healthy Communities).
Source: stateofobesity.org

Heart Disease

Key Facts

  • Number of adults with diagnosed heart disease: 28.1 million (11.5%).
  • Number of visits with heart disease, excluding ischemic, as the primary diagnosis:
    • Physician offices 15.5 million
    • Hospital outpatient departments: 1.9 million.
  • Cause of death rank: 1.

Source: CDC

The American Heart Association (AHA) and the American Stroke Association (ASA) published, Cardiovascular Disease: A Costly Burden for America, which includes 2015 costs and projected heart disease prevalence and costs in 2035.

US Prevalence of Cardiovascular Disease in 2015 and Projected Costs in 2035 
(in millions)

  2015 2035
High Blood Pressure 96.1 27.1
Coronary Heart Disease 16.8 7.2
Stroke 7.5 3.7
Congestive Heart Failure 5.8 3.0
Atrial Fibrillation 5.2 2.0

Heart Disease Costs

  • Total costs of cardiovascular disease in America in 2015: $555 billion
    • Current medical costs: $318 billion
    • Projected medical costs: $749 billion
    • Indirect costs: $237 billion
    • Projected indirect costs: $368 billion

US Costs of Cardiovascular Disease in 2015 and Projected Costs in 2035 
(in billions)

  2015 2035
High Blood Pressure $68 $154
Coronary Heart Disease $89 $215
Congestive Heart Failure $18 $ 45
Stroke $37 $ 94
Atrial Fibrillation $24 $ 55
Other $83 $187
Totals $318 billion $749 billion

Depression/Mental Illness

Key Mental Illness Facts (National Institute of Mental Health)

  • Number of American adults suffering from a mental health issue in 2016: 44.7 million (18.3%):
    • Adolescents aged 15-16 with any mental illness: 49.5%
    • Young adults aged 18-25: 22.1%
    • Adults aged 26-49: 21.1%
    • Adults aged 50+: 14.5%
  • Adults with mental illness who received treatment in previous year: 19.2 million.

Mental Health Costs (American Psychiatry Association)

  • Direct costs of treating and supporting mental illness: $55 billion a year.
  • Estimated indirect costs of lost employment or decreased productivity, accidents, and social welfare programs: $273 billion a year.
    • About $70 billion of that $273 billion is the estimated cost of untreated mental illness.

Read my previous blog, Could Mental Health be Your Biggest Cost Driver?, to learn more.

High Cholesterol (CDC)

Key Facts about High Cholesterol

  • Number of US adults age 20 or older who have total cholesterol levels greater than 200 mg/dL: 95 million.
  • Percent of US children and adolescents with high total cholesterol: 7%.
  • US adults in 2012 at risk because of low-density lipoprotein cholesterol levels or other conditions putting them at risk: 78 million (37%).
  • Percent of US adults who needed and were taking cholesterol medication: 43 million (55%).

Because high cholesterol is a contributing factor to cardiovascular disease and stroke, costs are not broken out in this section.

Smoking

Key Facts about Tobacco Use (CDC)

  • Number of US adults who smoke: 49 million:
    • 42 million used either cigarettes, cigars or hookahs, and water pipes
    • 7 million use smokeless tobacco.
  • Number of Americans living with a smoking-related disease: 16 million.
  • Number of deaths caused by smoking each year: 480,000.
  • Percentage of adults aged 18+ who use smokeless tobacco: 4%.

Tobacco Related Costs (WalletHub)

  • Number of US lives claimed by smoking since 1964: 20 million:
    • 5 million were nonsmokers who developed diseases from secondhand-smoke exposure.
  • Amount US spends each year on medical care and lost productivity from smoking: $300+ billion.

High-Risk Pregnancy (National Institute of Health)

  • Percentage of pregnant US women have high blood pressure: 6-8%:
    • About 70% of them are women who are pregnant for the first time.
  • Percentage of US pregnant women affected by preeclampsia: 3-5%.
  • Gestational diabetes. Percentage of US pregnant women suffering from gestational diabetes: 2-10%.

Costs of High-Risk Pregnancies

Childbirth costs vary widely across the country, making it difficult to establish the average cost of births. A University of California, San Francisco study found that 2014 hospital charges across the state experienced huge swings based on location, but averaged:

  • For uncomplicated vaginal birth: $3,296 – $37,227
  • For C-sections: $51,125.

We do know that the US in one of the most expensive places to have a baby, even when the pregnancy is routine and the baby is born healthy. If the baby is born prematurely or underweight, costs skyrocket. And as employers, you’re covering 11% of all babies born in the US, at a cost of $12 billion+ annually (March of Dimes).

Read my previous blog, Employers: A Perfect Storm is Converging Around Your Benefits Program Costs, to learn more about the impact of maternity costs on your bottom line.

Controlling Your Costs

So how can you help improve employee health and better manage your healthcare costs?

  • Offer a tobacco cessation program.
  • Promote the preventive services you cover since detecting conditions early, while they are more treatable, not only saves costs, but improves health outcomes.
  • Consider disease management and maternity management programs.
  • Offer a wellness program.

You should work with your advisor and carrier to promote the programs you offer, and consider offering incentives for participation. Before you make changes, you should understand what issues are impacting your population so you can design plans and interventions that will address the root causes of your members’ health issues. For that, you need data analytics.

To learn more about using data analytics for your benefits programs, read Harness the Power of Data Analytics.

Sashi Segu

Sashi Segu

Sashi Segu, Counsel, has participated in cases and provided legal expertise on HIPAA, ERISA, privacy, compliance, and other healthcare-related fields. Sashi left Innovu in March 2019 to pursue other interests.

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