EMBARGOED for release
Wednesday, May 14, 2003
With A.M. EDT Papers

For more information: contact:
Janet Firshein or Linda Loranger at 301-652-1558

Jon Gardner at Health Affairs at (301) 656-7401 ext. 230


Study Shows Medicare and Medicaid Are Financing Half the Burden

(Washington, D.C.) —
With more than half of Americans now either overweight or obese, a new Web exclusive article in the journal Health Affairs estimates that these conditions are contributing as much as $93 billion to the nation's yearly medical bill. Public payers—Medicare and Medicaid—finance about half of these costs, a group of economists conclude in the May 14 article.

Economists Eric Finkelstein and Ian Fiebelkorn of RTI International in North Carolina, and Guijing Wang, of the U.S. Centers for Disease Control & Prevention, computed the fraction of medical spending associated with being overweight and obese. Their data, based on a nationally representative sample of 9,867 adults aged 19 and older, were derived from the 1998 Medical Expenditure Panel Survey linked to the 1996 and 1997 National Health Interview Surveys.

Their study, funded by the Centers for Disease Control and Prevention, is the first of its kind to assess the effect of being overweight and obese on select payers, including individuals, private insurers, Medicare and Medicaid. Based on individual's self-reports, Medicaid recipients had the highest prevalence of obesity, nearly ten percentage points higher than the national average. The combined prevalence of overweight and obesity averages 53.6 percent across all insurance categories but is largest for those enrolled in Medicare (56.1 percent). Because obesity is associated with chronic diseases such as cancer, heart disease, and diabetes, obesity-related expenditures among seniors are expected to be significantly higher than the costs of obesity among younger populations.

In fact, the analysis shows the per capita increase associated with obese Medicare recipients is $1,486 annually. Obese Medicaid recipients had the next highest per capita increase, at $864 per person, whereas the increase among the obese with private insurance was $423. The higher prevalence and larger increase associated with obesity among Medicaid recipients may be because low-income individuals who qualify for this program are more likely to engage in riskier behaviors such as lack of exercise, poor nutrition, smoking or alcohol consumption. The average increase in annual expenditures associated with obesity in the entire adult population is $732 per person, or 37.4 percent.

Finkelstein says the findings reveal the extent to which the public sector is financing obesity-related costs. "There has been a debate about whether obesity is a personal or societal issue and whether the government has any business being involved," he says. "The fact that the government, and ultimately the tax payer, is financing half the economic burden of obesity, suggests that the government has a clear justification to try to reduce obesity rates," he adds.

Annual medical spending associated with being overweight or obese comprises 9.1 percent of what the U.S. spends on medical care, comparable to what is now spent on medical conditions linked to smoking. The authors say that as with smoking, the findings offer private and public insurers a "clear motivation" to consider strategies aimed at reducing the prevalence of obesity. They note that many health insurers, including Medicaid, offer smoking cessation treatment as a benefit and some private insurers charge smokers higher rates.

"Obesity is something as costly to society as smoking, yet the government and private health insurers have done very little to reduce obesity rates, partly because politically feasible cost-effective strategies have yet to be identified," says Finkelstein. With the prevalence of obesity increasing by 70 percent over the past decade, Finkelstein says the expenditure estimates should be a wake up call. "Obesity attributable expenditures will likely continue to increase unless something fairly drastic is done," he adds.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. "National Medical Spending Attributable to Overweight and Obesity: How Much, and Who's Paying?" a Web exclusive study, is only available on the journal's Web site, www.healthaffairs.org.


©2003 Project HOPE–The People-to-People Health Foundation, Inc.