Poor employee health is costing employers in a big way — to the tune of more than a half-trillion dollars and nearly 1.4 billion days of missed work each year.
That’s according to a new report from the Integrated Benefits Institute, which finds that employees miss around 893 million days a year from illness and chronic conditions, and another 527 million days because of impaired performance due to those illnesses. Those days add up to $530 billion in lost productivity.
“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,” says Thomas Parry, president of Integrated Benefits Institute, an independent nonprofit that serves more than 1,250 employers including Amazon, Kroger, McDonald’s and Walmart. The combined 2017 revenues of Apple, Amazon, Microsoft, Netflix, eBay and Adobe was roughly $525.7 billion.
The $530 billion price tag is on top of what employers already spend on healthcare benefits. Employers pay $880 billion in healthcare benefits for their employees and dependents, which means that poor health costs amount to “60 cents for every dollar employers spend on healthcare benefits,” according to the study.
“There’s not a CEO or CFO that can placidly accept their business expending the equivalent of almost two-thirds of their healthcare dollars on lost productivity,” Perry says. “Illness costs this country hundreds of billions of dollars, and we can no longer afford to ignore the health of our workforce.”
Employers invest in healthcare benefits to maintain a productive workforce. But this new study suggests that more needs to be done to keep employees healthy, or strategies need to be put in place to lower spending. Or both.
“It’s critical that employers understand how strategies for managing healthcare 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,” says Brian Gifford, director of research and analytics at IBI.
The study broke down the estimated costs of poor health into several categories:
Wage and benefits (incidental absence due to illness, workers’ compensation and federal family and medical leave): $178 billion.
Impaired performance (attributed to chronic health conditions): $198 billion.
Medical and pharmacy (workers’ compensation, employee group health medical treatments, employee group health pharmacy treatments): $48 billion.
Workers’ compensation other costs (absence due to illness, reduced performance): $25 billion.
Opportunity costs of absence (missed revenues, costs of hiring substitutes, overtime): $82 billion.
For its study, IBI used 2017 data from the U.S. Bureau of Labor Statistics as well as its own benchmarking data from 66,000 U.S. employers.
