Health Care Plan Cost Variation by Obesity Classification & Age GroupJoseph W. Thompson, MD, MPHSurgeon General, State of Arkansas

Director, Arkansas Center for Health Improvement

Associate Professor, University of Arkansas for Medical Sciences

AcademyHealth ARM 2008: Costs & Consequences

of Adult Obesity

June 10, 2008

Who is the CEO of the largest employer-based health insurance plan in your state?

Arkansas Public School Employees / State Employees Health Insurance Plan• Largest state-based insurance plan

(~ 120,000 employees)• Major influence in the state on plan design,

payment structure, network development• Self-insured plan with traditional benefit structure

– no preventive coverage in 2003• Aging work force with chronic illnesses• Escalating health insurance premiums• Lack of risk-management strategies

($1600/yr for smokers)• Decisions based on annual actuarial experience –

no long-term strategy

Arkansas Public School Employees / State Employees Health Insurance PlanCharge to the plan:

• Incorporate long-term management strategy for disease prevention/health promotion

Three phases undertaken:1) Awareness – Health Risk Appraisal (2004)

• Tobacco, obesity, physical activity, seat belt use, binge drinking

2) Support – New benefit incorporation (2005)• first dollar coverage of evidence-based clinical preventive

services• Tobacco cessation – Rx and counseling

3) Engagement – Healthy discounts (2006)

Obese32%

Daily Cigarette Users12%

Physically Inactive

21%

No Risks11% O+P

9%

C+P1.5%

C+O2%

C+O+P1%

HRA Respondents Eligible to Incur Claims (N=43,461)

O = ObeseP = Physically

InactiveC = Daily

Cigarette Use

C7%

O20%

P 10%

Self-Reported Risks (2006)

Other Risks39%

Obese$3,679

Daily Cigarette Users$3,081

Physically Inactive$3,643

No Risks$2,382 O+P

$4,158

C+P

$3,257

C+O

$3,529

C+O+P

$4,432

C

$2,690

O

$3,441

P

$3,169

Average Annual Total Cost by Risk Factor

O =ObeseP =Physically

InactiveC =Daily

Cigarette Use

Average Annual Total Costs Linked to Obesity

$1,597

$2,441

$785

$1,238

$0

$1,500

$3,000

$4,500

No Risk Obese

Pharmacy

Medical

Total costs Include medical (inpatient and outpatient) and pharmacy costs for 18-84 year old state employees.

No risk = normal weight, physically active, non-smoker. Obese = BMI≥30.

Total difference

$1,297 (54% higher)

Average Annual Total Costs Linked to Obesity compared with Cost for No-Risk Group by Age Group

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

18-24 25-34 35-44 45-54 55-64 65-74

$1,3

82

$1,8

57

$1,9

91

$2,4

09 $3,2

66 $4,3

38

No Risk$1

,230 $2

,160

$2,8

01 $3,7

65

$5,3

91

$8,8

60

Obese

$4,522 (104%)

Total costs include medical (inpatient and outpatient) and pharmacy costs for state employees.

1998

Obesity Trends* Among U.S. AdultsBRFSS, 1990, 1998, 2006

(*BMI 30, or about 30 lbs. overweight for 5’4” person)

2006

1990

No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%

Conclusions and Policy Implications• Obesity-related costs increase with age

and represent a major opportunity for cost containment and health improvement

• Costs dramatically increase with age and are differentially higher for those who are obese.

• Cumulative costs stratified by age and obesity classification may inform future actuarial projections for the plan and justify programmatic development.

Implications• Current health care financing constructs prevent

support for early screening, prevention, and treatment– Fragmented child, adult, senior support

– Onset of risk in child/adolescent period; cost impact as adults (maximum for Medicare)

– Congressional House Pay-Go rules; Congressional Budget Office 10-year window for cost-projections

• Without attention and a nationwide strategy to prevent and address precipitating behaviors known to cause disease, the financial viability of the health care financing system, particularly Medicare, is at risk.

Acknowledgements

• ACHI staff and co-authors– Paula Card-Higginson, BA, ELS

– Rhonda Jaster, MPH

– Jennifer L. Shaw, MAP, MPH, DrPH

– Sathiska D. Pinidiya, MEd, MS

• Arkansas Employee Benefits Division