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Poor Health of Employees Can Drag Down Productivity: Study

Workers' poor health and its drag on productivity costs U.S. employers $576 billion annually. The costs include those spent on group health policies for employees, short- and long-term disability, workers' compensation, illness absence, and presenteeism.

September 12, 2012
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Workers' poor health and its drag on productivity costs U.S. employers $576 billion annually, according to an estimate released Sept. 12 by the San Francisco-based Integrated Benefits Institute.

The costs include those spent on group health policies for employees, short- and long-term disability, workers' compensation, illness absence, and presenteeism.

Presenteeeism occurs when employees are at work, but not performing at their peak.

IBI said its researchers found that 39 percent of the total, or $227 billion, results from lost productivity tied to poor health that drives absences and presenteeism.

Wage replacement, meanwhile, accounts for $117 billion of the total and includes costs incurred under workers' compensation and short-term and long-term disability programs. Medical and pharmacy costs account for another $232 billion and include expenses incurred under work comp and group health medical and pharmacy treatments.

Because the U.S. presidential candidates have focused on the economy and health care it is important to understand the connection between the two, IBI said.

"There's a reason that everyone in the U.S. is worried about the economy and health care," IBI President Thomas Parry said in a statement. "These are two fundamental issues that are tightly coupled through health's impact on productivity and shape our standards of living. Since this election is weighing heavily on how the candidates tackle these issues, it's important that we recognize how they are connected. Illness costs this country hundreds of billions of dollars, and this should serve as a wake-up call for both candidates and employers to invest in the health of workers, for the sake of the people and the benefit of U.S. business."

The not-for-profit IBI, which provides research for major U.S. employers and insurers, said it reached its estimate by drawing on 2011 U.S. Bureau of Labor Statistics wage and benefits data and its own benchmarking data from 60,000 employers.

Roberto Ceniceros writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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