SAN FRANCISCO, Sept. 12, 2012 /PRNewswire-USNewswire/ -- With the upcoming presidential election hinging on health care and the economy, analysis shows that poor health and its impact on productivity costs the U.S. economy $576 billion per year. This is according to estimates by the Integrated Benefits Institute (IBI), a nonprofit health and productivity research organization.
In addition to showing the entire financial burden of poor health, IBI researchers found that 39 percent—or $227 billion—is due to lost productivity associated with poor health. Lost productivity results when employees are absent due to illness or when they are underperforming due to poor health ("presenteeism"—when employees are at work but not performing at their peak).
"There's a reason that everyone in the U.S. is worried about the economy and health care," said Thomas Parry, Ph.D., IBI president. "These are two fundamental issues that are tightly coupled through health's impact on productivity, and shape our standards of living. Since this election is weighing heavily on how the candidates tackle these issues, it's important that we recognize how they are connected. Illness costs this country hundreds of billions of dollars, and this should serve as a wake-up call for both candidates and employers to invest in the health of workers, for the sake of the people and the benefit of U.S. business."
American corporations commonly hold that their greatest asset is their workforce. There is a growing body of evidence that investing in a healthy workforce can have profound impacts on the bottom line. It's critical that employers understand what ill health really costs their businesses so that investments in health and productivity will be more informed, and ultimately wiser and more effective.
Sean Nicholson, Ph.D., a Cornell University economist and a leading researcher on the link between health and productivity, stated, "The literature shows that employers can save an average of $3 for every $1 they invest in improving their workers' health, so there are opportunities for companies to increase profits and wages while they improve worker health."
The estimate for total U.S. health costs is calculated using the IBI Full Cost Estimator (FCE), a proprietary tool that calculates the full costs of health and productivity based on five large databases. The tool can be used to show the full health and productivity costs for a specific industry, or even an individual company. In this case, the FCE was used to calculate the costs to the entire U.S. economy.
The estimated costs are categorized into the following major areas:
Wage Replacement (incidental absence due to illness, workers' compensation,
short-term disability, long-term disability)
Medical and Pharmacy (workers' compensation, employee group health
medical treatments, employee group health pharmacy treatments)
Lost Productivity (absence due to illness, presenteeism)
The estimates factor in the costs of medical care under group health policies (for employees, not dependents), illness absence, presenteeism, long-term disability, short-term disability, and workers' compensation. For this estimate, IBI used the most recent data (2011) from the U.S. Bureau of Labor Statistics as input values (128.3 million workers in the national workforce, and total wages and benefits at $7,369 billion) as well as input values representing the latest 2011 IBI Benchmarking Data based on 60,000 U.S. employers. The FCE tool also relies on a large dataset of employee self-reported information on chronic health and lost time and other national datasets.
About the Integrated Benefits Institute The Integrated Benefits Institute (IBI) provides employers and their supplier partners with resources for demonstrating the business value of health. As a pioneer, leader and nonprofit supplier of health and productivity research, measurement and benchmarking, IBI is a trusted source for benefits performance analysis, research-based approaches, and forums for information and education. IBI's programs, resources and expert member networks advance understanding about the link between—and the impact of—health-related productivity on corporate America's bottom line. For additional information visit ibiweb.org.