In a May report, the National Council on Compensation Insurance (NCCI) described the condition of the workers' compensation market as "deteriorating." In making that assessment, we pointed to a number of significant challenges confronting market stakeholders, including:

Premium decline—2010 net written premium for workers' compensation private carriers declined another 1.3 percent (a disturbing trend, albeit this was a much smaller decline than those of the prior two years).
Deteriorating underwriting results—With investment yields at historic lows, the current levels of underwriting losses are not sustainable.
Claim frequency—It is unclear whether an upward tick in claim frequency is a "new normal" or a one- or two-year phenomenon coming on the heels of the Great Recession.
The political situation in Washington, D.C.—With the enactment of the financial reform bill and the establishment of the new Federal Insurance Office, the influence of the federal government over property & casualty insurance issues is likely to increase significantly.
The health care reform bill—The impact of this bill on workers' compensation insurance remains uncertain.
Rising medical expenses—The average medical cost per lost-time claim increased 2 percent in 2010.

In dealing with many of these challenges, the market will need to wait for the economy to spring back, or for employers to once again begin meaningful hiring, or for our leaders in Washington to agree on a final disposition of national health care.

That is not to say, however, that there are no actions that can be taken to reduce system costs. One area in particular that appears ripe for attention is the growing issue of obese workers and the extra costs those workers cause the system.

A Growing Epidemic
As any casual observer of the news knows, the incidence of obesity in the U.S. is growing dramatically. Intuitively, the implications of this trend for workers' compensation are disturbing.

The Centers for Disease Control and Prevention (CDC) reports that being overweight or obese appears to increase the risk of incurring one or more diseases and adverse health conditions, including:

Hypertension (high blood pressure)
Dyslipidemia (for example, high total cholesterol or high levels of triglycerides)
Type 2 diabetes
Coronary heart disease
Stroke
Osteoarthritis (a degeneration of cartilage and its underlying bone within a joint)
Gallbladder disease
Sleep apnea and respiratory problems
Some cancers (endometrial, breast, and colon)

The CDC warning is consistent with other research findings. A 2008 study published in the Journal of Occupational and Environmental Medicine reported that in a survey of overweight and obese people, more than half of the respondents indicated that they suffered from at least one of the three leading heart/circulatory-related illnesses; more than 30 percent suffered from two or more illnesses (co-morbidity).

Despite the obvious health consequences, obesity continues to grow virtually unchecked in the U.S. Witness the following alarming growth in state obesity levels compiled by the CDC:

In 1990, among states participating in a CDC survey, 10 states had a prevalence of obesity less than 10 percent, and no states had a prevalence equal to or greater than 15 percent.
By 1999, no state had a prevalence less than 10 percent, 18 states had a prevalence of obesity between 20–24 percent, and no state had a prevalence equal to or greater than 25 percent.
In 2009, only one state (Colorado) and the District of Columbia had a prevalence of obesity less than 20 percent; 33 states had a prevalence equal to or greater than 25 percent, and 9 of these states had a prevalence of obesity equal to or greater than 30 percent.

Productivity and Medical Costs in the Workplace
As might be expected, excess weight also adversely affects work performance. In fact, the more medical problems there are, the greater the deterioration in performance. While it is evident that excess weight and related co-morbidities play a role in absenteeism, it appears that they especially contribute to declines in on-the-job performance.

Health-related costs are also much greater for overweight and obese employees with co-morbidities. This is true in terms of emergency room visits, visits to medical providers, and days of hospitalization.

A 2007 Duke University study published in the Archives of Internal Medicine confirms that the high costs associated with excess weight also characterize workplace injuries and workers' compensation costs, stating: " … nearly six workers comp claims were filed per 100 workers of normal BMI, compared with more than 11 claims filed per 100 of the heaviest workers."

Similarly, medical and indemnity severity increase steadily with the injured worker's body mass index (BMI). The costs associated with obese injured workers are more than double the average costs of workers of normal or "recommended" weight. NCCI Research on Obesity
NCCI's own research confirms that work-related injuries are far more costly if the injured worker is obese. The dramatically higher medical costs suggest that the types of injuries sustained by obese workers are more likely to result in permanent disabilities.

Our research team paired more than 7,000 claims with obesity as a secondary diagnosis with more than 20,000 claims with virtually identical characteristics: primary diagnosis, gender, industry group, year of injury, and approximate age.

Key findings included measuring the development of medical claim costs over time and on an individual pair basis:

Twelve months after the date of injury, the paid medical costs of obese claims were three times greater than the medical costs of the matched non-obese claims.
Cumulative medical payments for obese claims continued to grow at a faster pace than the non-obese claims; at 36 months they were four times more costly.
By 60 months, the difference in medical payments for the obese was more than five times greater than those for the non-obese.

These findings reflect differences in total dollars. From a personal perspective, it is worth noting that for the vast majority of claims—on a pair-by-pair basis—the claim with the obese diagnosis might be 40 to 90 times more expensive. To a large extent, this reflects the fact that a large portion of the non-obese claims were relatively low-cost, medical-only injuries; their obese counterpart often involved a much more extensive range of medical services.

Our study concluded that there are notable and systematic differences in the outcomes for obese and non-obese claimants with comparable demographic characteristics. The study also concluded that there is greater risk that injuries will create permanent disabilities if the injured worker is obese. (Additional information on NCCI's research on obesity is available at ncci.com.)

What Can Be Done?
Given a difficult workers' compensation environment, the need for carriers and employers to adopt innovative strategies to reduce both injuries and medical costs is all the more important.

Many companies, including NCCI, have turned to corporate-wide wellness programs to encourage healthier employees, reduced medical and insurance costs, and a more vital workplace.

Among the elements included in successful programs are:

Biometric screenings and health assessments
Encouraging appropriate exercise
Diet and nutrition education
Annual health assessments
Positive goal setting
Constant reinforcement and education.

Each of these measures offers a good first step toward addressing and reducing the incidence of obesity in the workplace.

Obtaining more data about obesity and its impact on workplace injuries also is important. Given past experience that obesity claims are more likely to be permanent disabilities and have higher costs, one way to control costs is to collect data on claims for height and weight. For example, the province of British Columbia, Canada, employs consultants to collect data on height and weight on applications for workers' compensation benefits.

If that data were available in the U.S., then insurers could become aware up front if obesity is likely to be an issue. If so, the insurer could try to improve the outcome for the injured worker and his family by keeping the claim from becoming a permanent injury and, in turn, reducing duration. Depending on the added costs of managing these claims, it might also reduce overall claim costs.

In terms of prevention, insurers could also consider offering incentives similar to those already in place for drug-free workplaces. Ultimately, however, it is up to individuals to take responsibility for their own health.

Clearly, there are marked differences in outcomes for obese and non-obese workers who sustain injuries with comparable primary diagnoses. In particular, injuries sustained by obese workers are more likely to be permanent disabilities.

That realization should serve as both a wake-up call and an opportunity for carriers, employers, and employees to seek more effective strategies to reduce obesity in the workplace. The promised result will not only reduce medical costs and minimize time off the job, but it will result in healthier and more productive employees.

Special Reports /

Obesity: Workers’ Comp’s Big Problem

Related Stories

Recommended For You