NCCI has published an interesting study on the relationship between obesity and the cost of workers compensation claims. To no one's surprise, the study concludes that medical costs for the same injury are 3 times higher among obese claimants in the first year, rising to five times higher at 60 months. In addition, claims for the non-obese are much more likely to be medical only; obese workers, when injured, tend to lose time and collect indemnity. For the same injury and all else being equal, the range of medical treatment, the costs and the duration of the claim are consistently greater for obese employees.
The study cites CDC data on the incidence of obesity in the general population. In 1990 10 states had incidence rates of obesity under 10% and none were above 15%. By 2009, 33 states had incidence rates equal to or above 25% and nine (mostly deep south) states had rates at 30% or higher.
The study is based upon 27,000 claims, of which 7,000 carried a specific diagnosis for obesity as a co-morbidity. Data wonks will duly note that there must have been a significant number of obese claimants outside the "obese" group, due to the fact that treating doctors would not consistently list obesity under the diagnosis.
Underwriting the Overweight
I feel a great deal of sympathy these days for the challenges facing comp underwriters and actuaries. Their customary approach of using the rear view mirror as the major indicator of future risk is increasingly ineffective. Now you can add the issue of obesity to mostly hidden factors that can seriously skew loss ratios.
The CDC data clearly indicates an alarming upward trend in obesity. Many of the obese are in the workforce. Indeed, companies might hire a person within the normal weight range and then see this individual gain substantial weight during the course of employment. Many of these burgeoning employees are performing physically demanding tasks. When they suffer from back strains, for example, the medical costs associated with treatment are more than double those of the non-obese. (On the other hand, the cost for the medical treatment of carpal tunnel injuries is virtually the same for the obese and non-obese.)
Fire the Big People?
With this data in hand, it may be tempting for employers to avoid hiring the obese and find ways of terminating current employees who tip the scale in the wrong direction. This would eliminate some very productive people. In addition, it raises the specter of discrimination. The Americans with Disabilities Act protects those with disabilities that impact "one or more major life activities." That might - but does necessarily - include the morbidly obese.
The NCCI study raises the issue of higher costs for injuries involving the obese. There is a more proactive way to look at the issue. Employers could focus on incentives to promote wellness. Employees who stay fit could receive enhanced benefits. We have drug-free and smoke-free workplaces. Perhaps it's time for snack-free workplaces - or healthy snacks. Out with soda machines and in with the vitamin water.
It's interesting to note that when opening comp claims, insurers generally do not collect data on height and weight . They really should. Where the data indicates that weight will be a significant factor in recovery, steps could be taken to encourage weight loss as part of the treatment plan. (For an example of court-ordered weight reduction, see our blog on the obese pizza maker here.)
Ultimately, the effort of employers to control losses will come up against the freedom of people to act as they choose. It's one thing to provide incentives for losing weight, it's quite another - especially in the deep south - to take away the Coca Colas. For many strong advocates of the American way, them's fighting words, indeed.