September 2009: Volume 35, Number 9

Cost of Obesity Tops $147 Billion Annually

A new report published in the journal Health Affairs estimates that the medical costs of obesity rose to as much as $147 billion per year in 2008, accounting for nearly 10% of all medical spending. This is an increase from an estimated $78.5 billion spent in 1998 to address obesity, of which roughly half was financed by either Medicare or Medicaid.

Despite efforts by the government and private employers to halt the obesity epidemic, data from the CDC show that obesity rates have increased by 37% between 1998 and 2006 to include 25.1% of the population. With per capita medical spending for the obese $1,429 higher per year, or roughly 42% more than for someone of normal weight, the economic burden of obesity has increased to 9.1% from 6.5% of all medical spending. The increase in obesity prevalence, not per capita cost increases, was the main reason for the increase in costs between 1998 and 2006.

The report also analyzed what type of medical service—inpatient, non-inpatient, or pharmaceuticals—results in the cost increases. For Medicare, non-inpatient and pharmaceuticals were major contributors to the increase in spending. Obese beneficiaries cost Medicare greater than $600 more per beneficiary per year compared to beneficiaries of normal weight. For Medicaid, only prescription drug spending was a significant driver of costs, accounting for a 61% increase in annual spending between 1998 and 2006. Overall, increases for services for all payers combined ranged from 27% (non-inpatient) to 80% (prescription drugs).

The report stresses that medical spending attributable to obesity is almost entirely the result of treating obesity-related diseases. Real savings to the healthcare system must include a reduction in the prevalence of obesity, which will require more than just policy changes to health financing and delivery.

A full copy of the report is available to subscribers online.