At $250B, Costs of Occupational Injury and Illness Exceed Costs of Cancer

The following post is from J. Paul Leigh at Working Economics, the Economic Policy Institute’s weblog

Occupational injuries and illnesses are overlooked contributors to the overall national costs of all diseases, injuries, and deaths. My recent study published in the Milbank Quarterly, “Economic Burden of Occupational Injury and Illness in the United States,” estimates these costs to be roughly $250 billion a year. This amount exceeds the costs of several other diseases, including cancer, diabetes, and chronic obstructive pulmonary disease (COPD) for the same year.

The medical costs associated with occupational disease and injury ($67 billion) are very large, but are exceeded by the productivity costs ($183 billion), which include current and future lost earnings, fringe benefits, and home production (e.g., cooking, cleaning, rearing children and doing home repairs). These costs do not in any way account for the pain and suffering caused by this heavy toll of injury and illness. They also gloss over the horror of many of the truly gruesome workplace injuries that occur, including suffocation in corn siloes, drowning in sewer pipes, electrocution, and being ground up or crushed in machinery.

By contrast, Rosamond and colleagues¹ have estimated the total cost of all cancers, including medical costs and lost production, to be $219 billion in 2007, $31 billion less than the combined cost of occupational injury and illness. Yet by most accounts, the research, medical, policy and even public attention afforded either cancer, diabetes, or COPD far exceeds the attention given to occupational injuries and illnesses. This lack of attention is especially troubling as the nation contends with high and rising health care costs. Cost-effective medical care requires that medical resources be allocated to their most beneficial use. If medical intervention “A” is generating fewer years of life for fewer people than intervention “B” and both interventions cost the same, then economic efficiency requires that some marginal resources be taken from “A’ and directed toward “B.”

Whereas the cost figures for the  occupational injury and illness versus cancer comparison are total, not marginal costs, given the great attention paid to cancer and the relatively little attention devoted to workplace injury and illness, economic efficiency suggests that the allocation between these two merits another look. For example, recent annual budgets for the National Institute for Occupational Safety and Health and the National Cancer Institute were $0.3 billion and more than $5.0 billion, respectively. This suggests a huge underinvestment in research to prevent occupational injury and disease.

Related research I recently published with James Marcin (“Workers’ Compensation Benefits and Shifting Costs for Occupational Injury and Illness“) addressed the question of who pays for occupational injuries and illnesses. Workers’ compensation insurance carriers are estimated to cover only roughly 21 percent of total costs. For medical costs only, other insurance (non-workers’ compensation) covers 48 percent, Medicare covers 24 percent, and Medicaid covers 18 percent, with the remaining 10 percent being picked up by injured workers and their families. I conclude that the lion’s share of occupational injury and illness costs are shifted from workers’ compensation carriers to workers and their families, non-workers’ compensation insurance carriers, and taxpayers. Given that public health programs currently pay more than 40 percent of the $67 billion annual medical cost of occupational injuries and illnesses, the potential financial return on a greater public investment in prevention research is quite substantial.

Mr. Leigh is a Professor of Health Economics at the University of California, Davis

Endnotes

1.  Rosamond W, Flegal K, Friday G, Furie K, Go A, Greenlund K., the American Heart Association Statistics Committee and Stroke Statistics Subcommittee Heart Disease and Stroke Statistics: 2007 Update. Circulation. 2007;115:e69–e171. [PubMed]

Rosamond W, Flegal K, Furie K., the American Heart Association Statistics Committee and Stroke Statistics Subcommittee Heart Disease and Stroke Statistics: 2008 Update. Circulation. 2008;117(4):e25–e146. [PubMed]