1. Health Care Plan Cost Variation by Obesity Classification & Age Group Joseph W. Thompson, MD, MPH Surgeon General, State of Arkansas Director, Arkansas Center for Health Improvement Associate Professor, University of Arkansas for Medical Sciences AcademyHealth ARM 2008: Costs & Consequences of Adult Obesity June 10, 2008

2. Who is the CEO of the largest employer-based health insurance plan in your state?

3. Arkansas Public School Employees / State Employees Health Insurance Plan Largest state-based insurance plan (~ 120,000 employees) Major influence in the state on plan design, payment structure, network development Self-insured plan with traditional benefit structure – no preventive coverage in 2003 Aging work force with chronic illnesses Escalating health insurance premiums Lack of risk-management strategies ($1600/yr for smokers) Decisions based on annual actuarial experience – no long-term strategy

4. Arkansas Public School Employees / State Employees Health Insurance Plan Charge to the plan: Incorporate long-term management strategy for disease prevention/health promotion Three phases undertaken: 1) Awareness – Health Risk Appraisal (2004) Tobacco, obesity, physical activity, seat belt use, binge drinking 2) Support – New benefit incorporation (2005) first dollar coverage of evidence-based clinical preventive services Tobacco cessation – Rx and counseling 3) Engagement – Healthy discounts (2006)

5. Obese 32% Daily Cigarette Users 12% Physically Inactive 21% No Risks 11% O+P 9% C+P 1.5% C+O 2% C+O+P 1% HRA Respondents Eligible to Incur Claims (N=43,461) O =Obese P =Physically Inactive C =Daily Cigarette Use C 7% O 20% P 10% Self-Reported Risks (2006) Other Risks 39%

6. Obese $3,679 Daily Cigarette Users $3,081 Physically Inactive $3,643 No Risks $2,382 O+P $4,158 C+P $3,257 C+O $3,529 C+O+P $4,432 C $2,690 O $3,441 P $3,169 Average Annual Total Cost by Risk Factor O =Obese P =Physically Inactive C =Daily Cigarette Use

7. Average Annual Total Costs Linked to Obesity Total costs Include medical (inpatient and outpatient) and pharmacy costs for 18-84 year old state employees. No risk = normal weight, physically active, non-smoker. Obese = BMI≥30. Total difference $1,297 (54% higher)

8. Average Annual Total Costs Linked to Obesity compared with Cost for No-Risk Group by Age Group $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 18-2425-3435-4445-5455-6465-74 $1,382 $1,857 $1,991 $2,409 $3,266 $4,338 No Risk $1,230 $2,160 $2,801 $3,765 $5,391 $8,860 Obese $4,522 (104%) Total costs include medical (inpatient and outpatient) and pharmacy costs for state employees.

9. 1998 Obesity Trends* Among U.S. Adults BRFSS, 1990, 1998, 2006 (*BMI 30, or about 30 lbs. overweight for 5’4” person) 2006 1990 No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%

10. Conclusions and Policy Implications Obesity-related costs increase with age and represent a major opportunity for cost containment and health improvement Costs dramatically increase with age and are differentially higher for those who are obese. Cumulative costs stratified by age and obesity classification may inform future actuarial projections for the plan and justify programmatic development.

11. Implications Current health care financing constructs prevent support for early screening, prevention, and treatment –Fragmented child, adult, senior support –Onset of risk in child/adolescent period; cost impact as adults (maximum for Medicare) –Congressional House Pay-Go rules; Congressional Budget Office 10-year window for cost-projections Without attention and a nationwide strategy to prevent and address precipitating behaviors known to cause disease, the financial viability of the health care financing system, particularly Medicare, is at risk.

12. Acknowledgements ACHI staff and co-authors –Paula Card-Higginson, BA, ELS –Rhonda Jaster, MPH –Jennifer L. Shaw, MAP, MPH, DrPH –Sathiska D. Pinidiya, MEd, MS Arkansas Employee Benefits Division