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Comparing excess costs across multiple corporate populations.

Douglas Wright1, Laura Adams, Marshall J Beard

  • 1Health Management Research Center, University of Michigan, Ann Arbor, Michigan 48104-1688, USA.

Journal of Occupational and Environmental Medicine
|September 9, 2004
PubMed
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Higher health risk levels significantly increase medical costs. Excess medical costs due to increased health risk account for a substantial portion of annual expenses, justifying health promotion programs.

Area of Science:

  • Health Economics
  • Occupational Health
  • Preventive Medicine

Background:

  • Medical costs are a significant concern for corporations.
  • Understanding the drivers of healthcare spending is crucial for cost containment.
  • Health risk assessments (HRAs) can identify individuals at higher risk.

Purpose of the Study:

  • To investigate the correlation between health risk levels and charged medical costs.
  • To quantify the excess medical costs incurred by high-risk individuals compared to low-risk individuals.
  • To determine the proportion of medical costs attributable to elevated health risks.

Main Methods:

  • Analysis of two years of medical claims data from six corporations.
  • Inclusion of 165,770 employees, with 21,124 participants in a health risk assessment (HRA).

Related Experiment Videos

  • Comparison of medical costs between HRA participants and non-participants, stratified by risk level.

    • Main Results:

    • Medical costs demonstrated a positive correlation with increasing health risk levels.
    • No significant inter-company variations in cost ratios were observed within specific risk levels.
    • Excess medical costs attributed to elevated risk ranged from 15.0% to 30.8% for HRA participants and 23.8% to 38.3% for the total study population.
    • Consistent cost patterns were observed across all participating companies.

    Conclusions:

    • Increased health risk is a substantial driver of medical expenditures across diverse corporate settings.
    • The findings support the implementation of health promotion programs to mitigate excess costs.
    • Health practitioners can confidently estimate that excess risk contributes 25-30% to annual medical costs, irrespective of industry or demographics.