Poor health costs employers $530 billion

Employees who suffer from poor health can be expensive. While employers already spend nearly $880 billion on the health care benefits they provide to employees and dependents, that’s not the only thing that costs them.

So says a new report from the Integrated Benefits Institute, which finds that illness-related productivity losses are pretty pricey too. Not only do employees covered by sick time, workers’ compensation, disability and family and medical leave benefits miss about 893 million days a year due to illness, they also rack up an estimated 527 million lost work days due to impaired performance.

That adds up to a whopping total of nearly 1.4 billion days annually, and amounts to 60 cents for every dollar employers spend on health care benefits.

Since investing in health care is supposed to have a major impact on companies’ bottom lines, it’s obvious that more needs to be done to improve the health of workers.

“To put this in further context, the cost of poor health to employers is greater than the combined revenues of Apple, Amazon, Microsoft, Netflix, EBAY and Adobe,” Thomas Parry, Ph.D., IBI president, said in a statement.

Parry added, “There’s not a CEO or CFO that can placidly accept their business expending the equivalent of almost two-thirds of their health care dollars on lost productivity. Illness costs this country hundreds of billions of dollars and we can no longer afford to ignore the health of our workforce. These results demonstrate the need for a more holistic, integrated strategy when it comes to managing health.”

Using the most recent data (2017) from the US Bureau of Labor Statistics, IBI categorized the estimated costs of poor health to US employers into several categories: wage and benefits (incidental absence due to illness, workers’ compensation and federal family and medical leave), impaired performance (attributed to chronic health conditions), medical and pharmacy (workers’ compensation, employee group health medical treatments, employee group health pharmacy treatments), workers’ compensation other costs (absence due to illness, reduced performance) and opportunity costs of absence (missed revenues, costs of hiring substitutes, overtime). Taken together, these total $530 billion.

“Our research helps employers understand what ill health really costs their businesses so that investments in health and productivity are more informed and more effective,” Brian Gifford, PhD., director, research and analytics for IBI, said in a statement.

Gifford added, “It’s critical that employers understand how strategies for managing health care spend—such as cost shifting to employees or ensuring better access and more cost-effective care—can impact the kinds of conditions that drive illness-related lost productivity.”

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