The Obesity Epidemic and Health Care Utilization in the United States

Ramzi G. SalloumDepartment of Economics

Wayne State University

Detroit, Michigan

December 3, 2007

2

Overview

Introduction Cost – Benefit Analysis Existing Models Data Model (Tobit Regression) Conclusions

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Why Obesity?

U.S. Health Care expenditures (2006) - $1.89 trillion 1

59 million59 million adult Americans (31%) are obese 2

Almost 65% are overweight

U.S. - Obesity Trends: 12.8% - 1976-1980 22.5% - 1988-1994 30.0% - 1999-2000

Americans spend more than $90 billion$90 billion annually in overweight and obesity costs 3

1 Organisation for Economic Co-operation and Development (OECD 2007)

2 U.S. Department of Health and Human Services, Office of the Surgeon General (2001)

3 Finkelstein et al., “National Medical Spending Attributable to Overweight And Obesity: How much and who is paying?” Health Affairs (2003)

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What is Obesity? Associated with:

diabetes heart disease hypertension sleep apnea osteoarthritis gallbladder disease some types of cancer

Causes: diet high in fat and calories sedentary lifestyle

An accumulation of excess body fat to an extent that may impair health 1

1 World Health Organization (WHO 2007)

Weight (kilograms)

Weight (pounds)

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Cost – Benefit Analysis 1

Direct Benefits / Costs ↓ treatment expenditures vs. ↑ prevention expenditures

Indirect Benefits / Costs ↑ productivity, ↓ sick time, ↑ opportunity costs

Controversial Issue should obesity be classified as a disease?

Non-Market Factors quality of life

Comparable to Smoking (treatment/prevention)

1 Folland, Goodman, Stano, The Economics of Health and Health Care. 5th edition. Pearson/Prentice Hall, 2007

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Cost – Benefit Analysis (2)

Other Concerns discounting risk adjustment

(public project) future inflation human life valuation

MSB MSC

$

E

Q* 100Q1 Q2

percentage reduction in obesity

Possible Use of QALYs Quality Adjusted Life Years

Point E:Point E:

MSB=MSCMSB=MSCNet Net

BenefitBenefit

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Existing Models

studystudy data typedata type sourcesource resultsresults

Wolf & Colditz (1998) x-section NHIS1 direct costs of obesity: 5.7% of U.S. national health expenditures

Sturm (2002) x-section HCC2 obesity: 36% increase in annual medical costs

Finkelstein, Fiebelkorn, & Wang

(2003)

panel MEPS/

NHIS3

obesity: 37% increase in annual medical costs;

direct costs of obesity: 5.3% of U.S. national health expenditures

1 National Health Interview Survey, Center for Disease Control and Prevention (CDC) (1988, 1994)

2 Healthcare for Communities, Robert Wood Johnson Foundation (1997-1998)

3 Medical Expenditure Panel Survey (1998), and NHIS (1996, 1997)

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Data

National Epidemiologic Survey on Alcohol and Related Conditions (NESARC) Conducted by National Institute on Alcohol Abuse

and Alcoholism (NIAAA) 1st wave interviews in 2001-2002 survey of 43,093 Americans results weighted to represent U.S. population focused on female and male samples, aged 40+

samples representative of 59.9 million females (n=13,615) and 52.3 million males (n=10,027)

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Model hdays = 0011obese 22 smoker33 drinker44 injuries55crimes 66mental77age +

u

Variable Definitions: hdays: number of hospital days in past 12 months obese: bmi ≥ 30 *

smoker: current or ex-smoker *

drinker: current or ex-drinker *

injuries: number of injuries in past 12 months crimes: number of times crime victim in past 12 months mental: diagnosis of mental disease *

age: participant age in years

* dummy variables

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Linear and Tobit Regressionslinearlinear tobittobit

femalefemale malemale femalefemale malemale

parameter p-value parameter p-value parameter p-value parameter p-value

obeseobese.212

(.130).103

.182

(.123).140

3.257

(.697).000

3.326

(.773).000

smokersmoker.184

(.126).142

.314

(.124).011

3.573

(.690).000

4.206

(.822).000

drinkerdrinker-.644

(.148).000

-.530

(.194.006

-3.410

(.774).000

-4.310

(1.140).000

injuriesinjuries.399

(.058).000

.417

(.073).000

1.711

(.214).000

2.919

(.326).000

crimescrimes.295

(.176).093

.146

(.146).320

2.928

(.774).000

1.853

(.755).014

mentalmental2.428

(.622).000

2.776

(.634).000

14.088

(2.558).000

13.168

(2.970).000

ageage.044

(.004).000

.042

(.005).000

.330

(.024).000

.422

(.029).000

conscons-1.253

(.316).000

-1.334

(.332).000

-46.694

1.949.000

-50.926

(2.393).000

RR22 .0143 - .0151 - .0139* 356.95 .0230* 386.11

* pseudo R-squared = 1 – LL(full model)/LL(constant only model)

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Limitations Low R-Squared

survey does not account for many determinants of hospital utilization

Non-Comprehensive Measure survey does not cover outpatient utilization of health care

Self-Reported Weight and Height overweight and obese people tend to underreport their weight

Other Non-Sampling Errors differences in interpretation of questions inability/unwillingness to provide correct information Inability to recall information errors in data collection and processing errors in estimating values for missing data

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Conclusions

Prevention vs. treatment expenditures Obesity has significant positive effects on

health care utilization (rivals effects of smoking)

Obesity and its costs will continue to rise Full effect of obesity epidemic yet to be

realized! Policy needed to curb the growth in obesity

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Need for Policy

Economic incentive for payers to reduce prevalence of obesity (similar to smoking)

Health insurers (including Medicaid) established strong incentives against smoking (higher rates for smokers, sponsored smoking cessation treatments, etc.), but weak incentives to fight obesity

Government heavily involved in reducing smoking rates (taxation, regulation, etc.), however, little done to curb weight gain

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References OECD Health Data 2007 (oecd.org) U.S. Department of Health and Human Services, Office of the

Surgeon General (surgeongeneral.gov) World Health Organization, Obesity (who.org) Folland, Goodman, Stano, The Economics of Health and Health Care.

5th edition. Upper Saddle River, NJ: Pearson/Prentice Hall, 2007 Wolf, A.M., Colditz, G.A., “Current estimates of the economic cost of

obesity in the United States” Obesity Res 1998 6: 97-106 Roland Sturm, “The Effects Of Obesity, Smoking, And Drinking On

Medical Problems And Costs,” Health Affairs, 2002; 21(2): 245-253 Finkelstein, Fiebelkorn, Wang, “National Medical Spending

Attributable to Overweight And Obesity: How much and who is paying?” Health Affairs (2003)

Grant, B.F., Kaplan K., Shepard J., Moore T. Source and Accuracy Statement for Wave 1 of the 2001-2002 National Epidemiologic Survey on Alcohol and Related Conditions. National Institute on Alcohol Abuse and Alcoholism: Bethesda MD; 2003.