Poor health costs employers $576 billion

September 14, 2012

Health insurance is expensive: The average employer-sponsored plan now costs $15,745, an all-time high. Not providing insurance, however, is pretty expensive too. There's a cost associated with lost productivity and sick days: $344 billion, to be exact.

That's the number economists at the Integrated Benefits Institute came up with when they added up the cost of sick days, lost productivity and spending on medical bills. Add that to the $232 billion that employers spend on medical bills and pharmacy costs, and it comes out to poor health costing $576 billion annually.

Here's a breakdown of the various costs of poor health. Medical spending was neck and neck with the effects of absenteeism, or sick workers who show up but do less:

This helps answer some questions that have come up about whether companies will offer health insurance in 2014. It certainly is a big budget item for all employers, large and small. But the return on investment isn't too shabby: When employees are healthy, they work more. The hours they work are more productive. That help explain why — even with no insurance mandate at all — the majority of employers keep making a big investments in paying health insurance bills.

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Ezra Klein | September 14, 2012