Overweight workers getting less pay as health costs spiral, says U.S study

Aug 09 2005 by Nic Paton Print This Article

More evidence has emerged from the U.S that, in an age of ever spiralling health costs, being overweight can seriously lighten your pay packet

A study by the country's National Bureau of Economic Research has found that many overweight workers in the U.S are paid less than slimmer counterparts in the same jobs to cover the cost of health insurance.

It follows a study last month by PricewaterhouseCoopers' Health Research Institute that found U.S. employees face higher health insurance bills and smaller pay rises as spiralling health costs eat into company profits and push up employment costs.

The NBER found that while health insurance premiums have risen, the shortfall in wages for obese workers has more than tripled over the nine years to 1998, from $1 (60p) an hour to $3.40 (£1.90).

"Even if employers nominally pay for health insurance premiums, it is really employees who bear the cost of employer-sponsored insurance," said report authors Jay Bhattacharya and M Kate Bundorf.

"We find that the incremental healthcare costs associated with obesity are passed on to obese workers with employer-sponsored health insurance in the form of lower cash wages," it concluded.

But were employers were not subsidising their health insurance, fatter workers were not underpaid, it found.

"There are virtually no wage differences between obese and non-obese among those who receive coverage from sources other than their employer," it said.

By not "risk rating" insurance premiums for obesity, employers were also doing their workers a disservice in that by failing to do so they are in effect shielding the workers from the full costs, physical and financial, of inactivity and overeating.

The PricewaterhouseCoopers study that half of large U.S. companies felt increased healthcare costs had contributed to slower profit growth over the past 12 months and, as a result, more than three-quarters were likely to ask employees to pay a greater share of health insurance costs.

One in four companies said double-digit healthcare cost increases may force them to lower wage increases for employees, and one in five expects to slow hiring of new permanent employees in the year ahead.