The Economy of Prevention

 Employees' poor health takes an enormous toll on the fiscal health of American business. From spring 2004 to spring 2005, health insurance premiums rose an average of 9.2 percent for almost every market segment and company size, ranging from mom-and-pop businesses to corporate giants. Since 2000, premiums for family coverage have increased by 73 percent, compared with general inflation of 14 percent and wage growth of 15 percent. [31]  

Well-designed and well-executed health promotion programs can pay for themselves by reducing health risk factors and improving health and productivity. [32] In 2002, Johnson and Johnson published the results of the first long-term evaluation of the financial and health impact of a large-scale corporate health and wellness program. Savings came from reductions in hospital admissions, mental health visits, and outpatient services. Savings grew over time, and most came in the third or fourth year after program inception. The bottom line: $225 saved per employee per year. And the results are getting better. The average cost-benefit ratio has increased from 1:3 for earlier programs to 1:6 today. [33]  

Tobacco and Obesity

Heart disease, cancer, and stroke may be the most common causes listed on death certificates. The worst real killers, though, are tobacco, poor diet, and lack of exercise. [34] (See  Figure 3 .)

Tobacco use is the major cause of preventable death in Texas and the United States, with more than 400,000 related deaths each year. [35] Annual medical and economic costs attributable to active smoking in the United States are $150 billion, according to the Centers for Disease Control and Prevention (2002). The annual costs of excess medical care, mortality, and morbidity caused by secondhand exposure to tobacco smoke exceed $10 billion. [36]  

More than 61 percent of Texas adults and 35 percent of Texas school-age children are considered overweight or obese. [37]  

The obesity epidemic hurts our schools and workplaces through absenteeism and lost productivity. An average-size school district could lose $95,000 in state aid per year due to the rate of absenteeism among overweight students. [38] At least half of worksite health care costs are driven by lifestyle-related behaviors, such as smoking, poor diet, and lack of exercise. [39] In all, an estimated $10 billion is spent annually on health care in Texas due to obesity; by 2040, that cost is projected to reach $39 billion. [40]  


Vaccines are among the greatest public health measures we have, particularly against life-threatening diseases in children. The direct and indirect savings of commonly used vaccines range from $2 to $24 per dollar invested, according to the National Immunization Program, Centers for Disease Control and Prevention (2004).

According to the Texas Department of State Health Services, pertussis (whooping cough) has killed more than 26 Texans since 1999, mostly infants too young to have received the vaccine; six of those were babies who died in the first nine months of 2005. The World Health Organization estimates that the annual cost of influenza epidemics to the U.S. economy is $71 billion to $167 billion.

Texas is currently 48th in the nation in childhood immunization rates. [41] Part of the reason for this dismal performance is that physicians and health officials have no way of knowing which children have been immunized. Additionally, recent media coverage questioning vaccine safety has made parents fearful of immunizing their children. Confusion resulting from changes in the recommended immunization schedule also has contributed. In recent years, sporadic vaccine shortages have compounded the problem.

Physicians face steep financial disincentives to provide immunizations. Reimbursement is inadequate. The total cost of administering vaccines, per shot, is $10.67 for pediatric practices and $7.57 for family practices. [42] The current reimbursement rate in Texas for vaccine administration is $5. Newly recommended vaccines have become increasingly expensive. Physicians must purchase those vaccines for people who do not qualify for the Vaccines for Children program and for those whose health plans do not cover the immunizations.

Mental Health and Alcohol and Substance Abuse

According to the National Institute of Mental Health, untreated mental illness costs the United States $300 billion each year; untreated depression alone is responsible for $40 billion of that. The American Psychiatric Association (2005) asserts that mental health treatment can more than pay for itself in terms of increased worker productivity; untreated psychiatric illnesses exacerbate chronic conditions like arthritis, asthma, and diabetes, thus increasing potentially avoidable visits to primary care physicians.

Alcohol and substance abuse pour additional stress onto our already-burdened medical system in Texas. Most people with untreated alcoholism require more general health care, including treatment for illness and injury. Their health care costs are at least 100-percent higher than for people who do not have alcoholism. Untreated alcohol problems waste $184.6 billion per year in health care, business, and criminal justice costs, and cause more than 100,000 deaths, according to the National Institute on Alcohol Abuse and Alcoholism (2000).

Underage drinking costs $3.7 billion a year for medical costs due to traffic crashes, violent crime, suicide attempts, and other related consequences. The total annual cost of alcohol use by underage youth is $52.8 billion. [43]


[31] Kaiser Family Foundation.
[32] .
[33] Texas Department of State Health Services. Worksite Wellness - Reap the Benefits of Health; 2005.
[34] Mokdad AH et al. Actual Causes of Death in the United States, 2000. JAMA 2004;291:1238-45.
[35] U.S. Department of Health and Human Services. The 2004 Surgeon General's Report.
[36] Behan DF, Eriksen MP, Yijia L. Economic Effects of Environmental Tobacco Smoke; March 31, 2005.
[37] Texas Department of Health. Strategic Plan for the Prevention of Obesity in Texas.
[38] Action for Healthy Kids Alliance. The Learning Connection: The Value of Improving Nutrition and Physical Activity in Our Schools; 2004.
[39] Texas Department of State Health Services.
[40] Texas Department of Health. The Burden of Overweight and Obesity in Texas 2000-2040.
[41] National, State, and Urban Area Vaccination Coverage Among Children Aged 19-35 Months - United States, 2004. MMWR; July 29, 2005 / 54(29);717-721. Accessed October 2005 at mm5429a1.htm .
[42] Glazner JE et al. The Cost of Giving Childhood Vaccinations: Differences Among Provider Types. Pediatrics, Vol. 1333, No. 6; June 2004, 1582-7.
[43] Levy DT, PhD; Miller TR, PhD; Cox KC. Costs of Underage Drinking. Calverton, MD: Prepared by Pacific Institute for Research and Evaluation for the Office of Juvenile Justice and Delinquency Prevention; 1999. Accessed October 2005 at .