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Healthcare costs

Large increase in US medical costs for treating obesity-related illness

North Carolina, Ohio and Wisconsin spent >12% of all healthcare dollars on obesity

The percentage of US national medical expenditures devoted to treating obesity-related illness in adults rose from 6.13% in 2001 to 7.91% in 2015, an increase of 29%. Although, the prevalence of obesity has risen dramatically in the US, but there has been little information about the economic impact of this trend for individual states. Research by John Cawley, professor of policy analysis and management at Cornell University, provides new insights on how individual states are affected by the health care costs of obesity.

The paper, ‘The Impact of Obesity on Medical Care Costs and Labor Market Outcomes in the US’, published in the journal Clinical Chemistry, analysed data from the Medical Expenditure Panel Survey (MEPS) for 2001–2015 and estimated the percentage of healthcare costs that were associated with adult obesity, both for the US as a whole and for the most populous states. It also reviewed the literature on the impact of obesity on economic outcomes such as medical care costs, employment and wages.

"We have, for the first time, estimated the percentage of health care spending that is devoted to obesity, using microdata for each state," said Cawley, who co-authored the paper with Adam Biener of the Agency for Healthcare Research and Quality and Chad Meyerhoefer of Lehigh University.

The authors report that substantial differences existed across states; in 2015, some states (Arizona, California, Florida, New York and Pennsylvania) devoted 5%–6% of medical expenditures to obesity, whereas others (North Carolina, Ohio and Wisconsin) spent >12% of all healthcare dollars on obesity. A review of previous literature that exploited natural experiments to estimate causal effects found that obesity raises medical care costs and lowers wages and the probability of employment.

The publication reports results by payer type, including private health insurance companies, Medicare and Medicaid.

"Once again, we find dramatic differences across states in the fraction of Medicaid spending that is devoted to obesity-related illness," added Cawley. "For example, over 2001-15, Kentucky and Wisconsin devoted over 20 percent of their Medicaid spending to obesity-related illness. In contrast, in New York, 10.9 percent of Medicaid spending was devoted to obesity-related illness, and the average for the U.S. as a whole was 8.23 percent during that period."

Estimates could not be generated for less populous states because of a scarcity of information about their residents in the data. Previous estimates of the health care costs of obesity by state were not based on microdata for each state but on assumptions about how national costs should be apportioned to different states.

These differences across states are driven by a number of factors, such as differences in obesity prevalence, health care access by obese individuals, how obesity is treated and prices of health care, he concluded.

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