July 14, 2010
In spite of high unemployment numbers, there’s a lot of fat in the workplace—and it’s costing a bundle. With studies over the past three years showing that American workers’ expanding waistlines are impacting corporate bottom lines even more dramatically than previously thought, through increased health care costs and decreased productivity, major corporations are taking action.
They can’t afford not to. Two-thirds of Americans are obese or overweight today. And as their health goes, so goes that of their employers. Health costs alone are an estimated $147 billion annually according to the Centers for Disease Control (CDC). And private employers are hit with an estimated $45 billion a year in medical expenditures and work loss, according to a 2008 report by the Conference Board (the latest report available).
At Advocate Health Care, one of the largest health care providers in the Midwest, obesity cost nearly $6 million in lost productivity last year alone. That’s six times as much as the costs attributed to smoking. “Through our health-risk assessment, 69 percent of our population is overweight,” said Nicole Martel, senior manager for fitness and wellness at Advocate. “This is a huge focus for us.”
Losing Pounds or Losing Business
States and communities with high obesity rates also have a lot to lose. “F as in Fat: How Obesity Threatens America’s Future 2010,” a report last month from advocacy organization Trust for America's Health and the Robert Wood Johnson Foundation, said businesses are reluctant to locate to areas where workplace pools are unhealthy. Those unhealthy “sites” are proliferating. Adult obesity rates have now jumped in 28 states, with 38 states declaring adult obesity rates above 25 percent, according to the report. Ten years ago not a single state had an obesity rate above 20 percent.
Obesity is called a gateway condition because it can lead to heart disease, diabetes, and hypertension. But overweight employees pay for their girth in other ways. For starters, they can be vulnerable to pervasive weight discrimination. A Chicago-area recruiter who requested anonymity recalled an impressive job candidate who was very professional, had all the right credentials, and did well in the telephone screening. But when she brought the candidate in for a face-to-face interview, she was shocked at his physical size. “The HR director of the company said to me afterward, ‘I’d be very hesitant to hire a guy like him because he clearly has something going on.’”
“Weight discrimination has increased 66 percent over the past ten years," said Rebecca Puhl, director of research and weight stigma initiatives for the Rudd Center for Food Policy and Obesity at Yale University. “It’s very pervasive and hard to prove. Employers can mask the real reasons for refusing to hire someone.” Also, “obese women earn six percent less for the same work. Men earn three percent less."
Significant Corporate Investments
In an effort to reduce costs, more companies are offering proactive wellness programs to their employees. IBM spends more than 1.3 billion a year on health care for the 450,000 employees, retirees, and family members it covers in the United States. Between 2005 and 2007, the company saved $190 million in health care costs because employees took responsibility for adopting healthier behaviors.
To assist employers in establishing obesity-prevention programs, the CDC recently established LEAN Works, a free web-based resource. “Employers realized several years ago that to slow [their health care] cost increases, they had to do a lot more than just treat people when they’re sick,” said Peter Hotz, a group vice president at Walgreen’s.
Advocate Health Care offers its 24,000 employees and their dependents an incentive point program. Participants can earn a $200 credit toward a reimbursement account for medical expenses as well as points for participating in sponsored programs. Cash cards worth $100 are awarded in bimonthly raffles, and an annual grand prize raffle offers the top prize of $5,000.
But companies can go even further. Linda Barrington, who co-wrote the Conference Board report and is managing director at the Institute for Compensation Studies at Cornell University, said, “Employers [should] think about the sort of draconian measures that New York’s mayor Michael Bloomberg has taken in forcing all restaurants to put calorie counts on the menus. It’s actually had a measurable impact. If you tell people how many calories [they consume,] they’re going to make healthier choices.”
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