Poor Health Costs US Employers $530 Billion and 1.4 Billion Work Days of Absence and Impaired Performance According to Integrated Benefits Institute

Lost productivity due to avoidable workforce absence and low performance accounts for almost 63% of the cost of benefits

San Francisco, Nov. 15, 2018 (GLOBE NEWSWIRE) -- US employers paid nearly $880 billion in health care benefits for employees and dependents. However, illness-related lost productivity costs them another $530 billion per year, per a new report from the Integrated Benefits Institute (IBI), a nonprofit health and productivity research organization. That amounts to 60 cents for every dollar employers spend on health care benefits.

Employees covered for sick time, workers' compensation, disability, and family and medical leave benefits are absent about 893 million days due to illness and incur an estimated 527 million lost work days due to impaired performance. This totals almost 1.4 billion days annually of employees absent – greater than  every nurse in the US missing a year of work.

“To put this in further context, the cost of poor health to employers is greater than the combined revenues of Apple, Amazon, Microsoft, Netflix, EBAY and Adobe,” said Thomas Parry, PhD, IBI President. “There’s not a CEO or CFO that can placidly accept their business expending the equivalent of almost two-thirds of their health care dollars on lost productivity. Illness costs this country hundreds of billions of dollars and we can no longer afford to ignore the health of our workforce. These results demonstrate the need for a more holistic, integrated strategy when it comes to managing health.”

American corporations commonly hold that their greatest asset is their workforce. There is a growing body of evidence that investing in a healthy workforce can have profound impact on the bottom line.

“Our research helps employers understand what ill health really costs their businesses so that investments in health and productivity are more informed and more effective,” said Brian Gifford, PhD, Director, Research and Analytics for IBI. “It’s critical that employers understand how strategies for managing health care spend – such as cost shifting to employees or ensuring better access and more cost-effective care – can impact the kinds of conditions that drive illness-related lost productivity.”

The estimate for total US health costs is calculated using the IBI Full Cost Estimator (FCE), a proprietary online tool that analyzes the full costs of health and productivity based on several large databases. The tool can be used to show the full health and productivity costs for a specific industry, or even an individual company. For this research, the FCE was used to calculate the costs for nearly 143 million employees (roughly the size of the US workforce in 2017).

The estimated costs of poor health to US employers are categorized into the following major areas:


Cost $ Billions
Wage and benefits (incidental absence due to illness, workers’ compensation and federal family and medical Leave) $178
Impaired performance (attributed to chronic health conditions) $198
Medical and pharmacy (workers’ compensation, employee group health medical treatments, employee group health pharmacy treatments) $48
Workers’ compensation other costs (absence due to illness, reduced performance) $25
Opportunity costs of absence (missed revenues, costs of hiring substitutes, overtime) $82
Total  $530*

The estimates factor sick days, short-term disability, long-term disability, federal family and medical leave, workers’ compensation and impaired performance. For this estimate, IBI used the most recent data (2017) from the US Bureau of Labor Statistics (BLS) as input values (nearly 143 million workers in the national workforce, and total wages and benefits at $10.6 Trillion) as well as input values representing the latest 2017 IBI Benchmarking Data based on 66,000 US employers. The FCE tool also relies on a large dataset of employee self-reported information on chronic health and lost time and other national datasets.

By comparison, employers paid nearly $880 billion in health care benefits for employees and dependents, based on the BLS estimate of $0.12 for health insurance for every dollar in wages.

An infographic with additional details can be found here.

About Integrated Benefits Institute
The Integrated Benefit Institute’s independent research, industry-leading tools and data resources, and network of subject matter experts help companies link health-related programs to the outcomes that maximize the contributions of people to productivity and business performance. Founded in 1995, IBI is a national nonprofit research organization and business association serving 1,100 employer and supplier members and their 22 million employees. For additional information, please visit www.ibiweb.org and follow us on Twitter and LinkedIn.

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*Totals may not sum due to rounding



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