Obesity Comes With a Price Tag

There are hard dollars-and-cents costs to being overweight or obese, according to Humana (NYSE: HUM), one of the nation’s largest health benefits companies.

Specifically, Humana estimates these costs at the following for 2009:

• $19.39 in added health care costs for every overweight pound;
• $1,037.64 for every overweight individual;
• $127 billion added to the national health care bill.

Overweight people are more prone to heart disease, stroke, diabetes — even some kinds of cancers. Chronic diseases that are a result of weighing too much are an ever-increasing part of America’s health care bill.

Carol McCall — a research actuary at Humana — culled through national health care data and the data from Humana’s members, and here is what she found.

Like butter and sugar, obesity has a cost per pound

On average, the annual per-pound cost of being overweight — that is, the added cost per added pound of the overweight and the obese — is $19.39. The cost increases with age.

For 25-year-olds, it averages $10.25 for every overweight pound. By age 64, it increases to $26.32. (On average, overweight people are 29 pounds overweight; the obese are 82 pounds overweight.)

For someone age 25, the added annual health care cost is $209 for the overweight and $960 for the obese. By age 64, this grows to $610 extra for the overweight and $2,300 for the obese.

Why this impacts the national healthcare crisis

There are more than 122 million overweight and obese Americans between the ages of 20 and 65. On average, their additional health care costs are $534 per year for an overweight person and $1,614 for an obese person. Those costs add up to a $127 billion crisis. The increase in obesity prevalence – going from 23 percent to 33 percent between 1994 and 2004 – added $34 billion to the annual health care bill.

A person who is 25 and obese today, and remains obese until they’re 65, will average $179,000 more in health care costs (in 2009 dollars, assuming health care inflation of 4 percent a year) over those 40 years.

A new way to look at and to count calories

Maintaining all of those extra pounds requires Americans to take in 23 trillion calories a year. That’s the equivalent of 46 billion Big Macs, 114 billion Krispy Kreme donuts or 152 billion bags of chips.

These calories have the same energy as the following:

• 10 1,000-megawatt power stations generating for a year
• 788 million gallons of gasoline
• 10 million tons of coal
• 96 trillion AA alkaline batteries

There is a way to get out of this national problem

The good news is that Humana’s data also indicates that just a small change – a reduction of 276 calories a day for the overweight – makes a big difference. Cutting that little from each day’s intake would start moving millions of Americans from the category of overweight to healthy. That means people don’t have to re-engineer their lives to get on a healthier path. Incremental change — giving up one soft drink and walking an extra 2,500 steps each day, for example — will do the job.

"If obesity were eliminated, or even significantly reduced,” says McCall, "the money saved would be significant. It could pay for food for the poor, health insurance for the uninsured or millions of college educations every year.”

Dr. Jonathan Lord, Humana’s Chief Innovation Officer — who oversees Humana’s efforts to reduce health care costs by engaging people in healthy behaviors — put it this way: "In this time of financial crisis, it’s now clear that Americans can improve the economy as well as their own health prospects by giving up a few pounds.”

"Riding a bike and taking a walk in the park burn calories,” Dr. Lord says, "but those activities are also fun. Life is so hectic and we are so dependent on cars that many of us have forgotten that.”

Humana’s Innovation Center is full of teams trying to find new ways to engage people in their health. The company believes that the key to success is to meet people where they are: at school, playing video games, on cell phones, walking or riding bikes in the park.

Humana, for example, created the Freewheelin bike-sharing program, which debuted at the Democratic and Republican national conventions last summer. In less than two weeks, 7,523 rides were taken, 42,000 miles were ridden, 1.3 million calories were burned – and participants who hadn’t been on a bike in years raved about the experience. Now, Humana is partnering in B-cycle, a new company it created to sell bike-sharing programs to cities and universities.

Humana also is partnering in Sensei, a cell phone application to support people in making better nutritional choices and in physical activity. And the company has also pioneered several very successful pedometer programs in England and in this country.

About Humana

Humana Inc., headquartered in Louisville, Ky., is one of the nation’s largest publicly traded health and supplemental benefits companies, with approximately 11.7 million medical members. Humana is a full-service benefits solutions company, offering a wide array of health and supplementary benefit plans for employer groups, government programs and individuals.

Over its 47-year history, Humana has consistently seized opportunities to meet changing customer needs. Today, the company is a leader in consumer engagement, providing guidance that leads to lower costs and a better health plan experience throughout its diversified customer portfolio.

More information regarding Humana is available to investors via the Investor Relations page of the company’s Web site at http://www.humana.com, including copies of:

• Annual reports to stockholders
• Securities and Exchange Commission filings
• Most recent investor conference presentations
• Quarterly earnings news releases
• Replays of most recent earnings release conference calls
• Calendar of events (includes upcoming earnings conference call dates and times, as well as planned interaction with research analysts and institutional investors)
• Corporate Governance Information

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