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Health and Medicine

The Business of Obesity
The final segment of WKSU's series "The Business of Health"
This story is part of a special series.

Vivian Goodman
J. B. Silvers is a professor of health finance at the Weatherhead School of Management at Case Western Reserve University. He says obesity is a dead-weight loss to society.
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In The Region:

Obesity is an enormous problem in the United States and the impact is not only on our health. 

More than two-thirds of Americans are overweight. More than a third of those are obese. 

And the economic cost is staggering.

In the final installment of our series, “The Business of Health,” WKSU's Vivian Goodman reports that Ohio, with the 8th highest rate among the states, has a lot to lose if the obesity epidemic rages on.


LISTEN: The cost to society of the obesity epidemic

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 “It’s all about money. It’s all about money.”  

Spoken by one who knows.  “I’m Dee Wolk. I was a former fat person.”   

Wolk tried every diet. She kept regaining weight, and losing money.   “Well, the diet industry is worth billions, and they market it. You know, ‘In 5 days you’ll lose 5 pounds.’ ” 

The ads used to hook her. Now they just enrage her.   “When I see it on TV, I turn off the TV.”  

About 108 million Americans are spending about $20 billion a year on diets, and Wolk knows many don’t care what it costs.   

 “People are panicked when they’re overweight. They want to get it off. Maybe they want to get into the dress or the suit for the wedding.”    

The yo-yo effect
What Wolk calls the “Yo-Yo” effect has most of them regaining the weight within 2 to 5 years.    “Starve, stuff, lose, gain, and that wrecks your metabolism.”  

It may also be wrecking the economy. A recent study in Health Affairs magazine pegs obesity –related medical costs at 147 billion annually. 

Most experts agree the solution is a holistic approach, a change in lifestyle. 

Thirty years ago Dee Wolk gave up on diets and permanently took off 42 pounds. 

No diet
With what she learned about how her own body works, she founded her Beachwood-based company “No Diet Weight Solution.”   

 “Anything to share this week, any awarenesses?” Wolk asks at a workplace meeting. 

“That I need to start eating out less,” says a participant. “So I’m going to dust off my stove and start to cook.” 

 “I think that’s great,” says Wolk. “That’s good. That’s a goal.”  

Wolk ‘s client list includes many of the region’s major employers.   

 “It has definitely helped them in dollars and cents with their insurance costs.”  

Corporate self-interest
Corporations like Lubrizol, Stouffer’s and Parker Hannifin pay Wolk as much as $250 per participant to help their employees lose weight.   

  “Some companies take it, a payroll deduction. Some companies pay 80%. I’ve only had one company that pays the total cost. And I was concerned. I thought if the person didn’t have skin in the game they wouldn’t be committed. But they were. They were so appreciative.”  

Wolk says they are appreciative of not only the weight loss, but also reduced personal costs, especially for diabetics.   “Great cost savings. They lose weight and they don’t need the medication anymore.”   

Diabetes is one of the costliest results of obesity and Ohio ranked 9th for it last year. 

Cost-savings for individuals
But Wolk says her successful clients save in other ways when it comes to medical bills. 

She had a client with lung disease.  “Instead of going through a lung transplant which was incredibly costly, she lost in under a year, 84 and a half pounds. She saved a ton of money, and she’s happy and healthy.”  

Wolk says her program participants also spend less at restaurants and supermarkets.   “They’re overeaters, but I teach them to eat often and eat less. They’re buying less food. They don’t need all that food.”   

With a healthier workforce,  Wolk’s corporate clients stand to save, too. 

Figuring in the cost of absenteeism, lost productivity, and medical bills, the annual cost to an employer of an obese employee is $6,000 more than a normal-weight employee.  

Workplace wellness
That’s why employers look for help.

 In the case of Medical Mutual, a major insurance company, it’s coming from Weight Watchers.   

 “Did we have any learnings from last week?” asks the leader at the company's workplace Weight Watchers meeting. “Don’t eat bread,” says a participant.   

“Did you have a little episode?” the leader inquires. Then she offers advice. “I found that bread triggers me and I never get satisfied once I start eating it. Anybody else?”  

Cindy Ballog is manager of wellness at Medical Mutual.   “We try to be a role model.”  

Medical Mutual employees who want to lose weight, as well as those insured by the company, get financial help.   

 “So if the member is enrolling in the Weight Watchers program they would pay for the program, and then at the completion of the program they would submit to us that payment, and we would refund about a third of the cost to them.”  

So far 63% of Medical Mutual employees on the program have lost an average of 13 pounds.   It’s a start at fighting an age-old problem that we’re starting to look at in a new way. 

Obesity is now officially a costly disease
It was only recently that the American Medical Association branded obesity a disease.  They used to call it just a major public health problem.  

 “This is a huge dead-weight loss, to use an economic term, on society,” says J.B. Silvers. He is a professor of health finance at the Weatherhead School of Management at Case Western Reserve.  

 “The direct medical cost is a huge one, but the ones people don’t understand are productivity loss, people don’t show up at work as often, they have more sick days. And ultimately human capital costs, the fact that people don’t progress as far in life. And then I think there’s a generational cost, too. Obesity in children, which is a huge target, is most highly associated with obesity in their parents. We pass it on.”  

More than a third of American kids are overweight or obese. If the trend continues that’s expected to result in up to $956 billion in additional health costs by 2030. 

Ohio ranks as the 12th worst state for childhood obesity.  About 13 percent of our kids are obese, but the Ohio Department of Health’s Early Childhood Obesity Prevention Plan has a goal to reduce that by 2.5%. That would save Ohio about $42 million in direct medical costs. 

The price of obesity
Adult obesity in Ohio was only 11 percent in 1990. Today 32.6% of Ohioans are paying the price of being obese.   

 “Oh, it’s huge, “says Professor Silvers. “Upwards of 50% additional cost to be obese, relative to a normal weight.”   

And if you’re already poor it hits you harder.   “In some ways you could argue it’s a regressive tax.”  

A recent Pew Research survey finds poor women are the most likely to be obese with a rate of 42%. That’s for poor women in all ethnicities.   “People that are in lower socio-economic status, minorities and lower income,” says Silvers, “have a much worse problem than people that are of higher income. The data is really clear.”  

Silvers says race is also a factor.  “Black workers are almost 1.5 times as likely to be obese as white workers. That leads to much lower earnings: $263 a week, and this is Labor Department data, versus $349 for whites. You could argue that a big chunk of that is because of obesity.”   

The cost is borne by all
Because it leads to most chronic diseases, obesity directly or indirectly causes 30% of the nation’s total medical costs.  "For every obese person it’s an extra $3500 per year of extra medical cost.”  

But Silvers notes that the obese individual bears only half that cost.  “The other part’s borne by Medicare and Medicaid and the rest of us. So it’s a tax that is partially borne by lower-income people disproportionally, and then to the extent that these are tax- supported, it’s supported by all of us.”  

Now that the Affordable Care Act won’t let insurance companies exclude pre-existing conditions like obesity, even skinny people are affected.   

 “That’s one reason why health care costs have gone up for everybody else is because we’re spreading that load through the insurance mechanism, and as a result, since those companies now have to bear the risk they’re getting serious about it.” 

In Ohio, screening and counseling for obesity is covered as a benefit of the Affordable Care Act. For the very poor, Medicaid covers it too, but with limits on how many times a year and who you can go to for help.   

 “In health care the worst pre-existing condition is poverty, by far. If lower-income people were less obese we would all be better off. We’d be better off financially. We’d be better off in terms of productivity.”   

Corporate responsibility
In their enlightened self-interest employers are responding with nutrition and cooking classes and workplace wellness programs. 

Cathy Dubois, Associate Dean for the College of Business Administration at Kent State, calls it a matter of corporate responsibility.  

 “Businesses have, their primary work effort is toward making profit. But there’s been an increased emphasis for workplaces that supported workers rather than just extracted their lifeblood from them and gave them some wages in return.” 

Other solutions proposed for the obesity epidemic include making people pay more for unhealthy choices, like taxing sugary drinks. 

But Professor Silvers says there’s no magic bullet.   “There’s no question when people have to pay more to do bad things they do fewer bad things. We know that. It works. Is it enough to change the underlying cause of this? Probably not.”   

But Kent State Professor of Business and Health Care Management Steve Riczo disagrees. He thinks regulation on fast food and junk food could cut both the economic and human cost of obesity.   

 “The number of deaths now are comparable to tobacco-related deaths which are about 400,000 a year. So as a society just as government stepped in in the tobacco industry and regulated marketing, I think we need to do the same thing with the food industry.”

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