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Preventive Services

Why Employers Care

Chronic diseases are the leading cause of direct healthcare costs for employers. In fact, researchers estimate that 75% of all healthcare costs stem from preventable chronic health conditions such as type 2 diabetes, hypertension, and obesity.1,2 Chronic diseases are also a major cause of lost productivity and disability, totaling over one billion dollars in lost productivity in 2003, a figure that is expected to triple over the next 20 years.3 It is estimated that chronic diseases will cost the global economy nearly $47 trillion in direct and indirect costs in the next 20 years.4

Many chronic diseases and acute conditions, such as seasonal flu, can be effectively prevented through lifestyle changes, immunizations, preventive medications, or screenings. Despite the benefits of prevention, only half of insured adults receive preventive interventions according to guidelines for their age and sex.5 Moreover, only 2 to 3 percent of the $2.3 trillion dollars spent on health care in the United States is devoted to protecting health and preventing illness and injury.6,7

The goals of prevention are to:

  • Encourage individuals to avoid or delay disease by practicing healthy lifestyles;
  • Identify individuals who could benefit from treatment for a condition or complication about which they are unaware; and
  • Prevent further disability among individuals with established disease.

Most clinical preventive services are cost-effective and many are cost-saving. For example:

  • Every dollar spent on immunizations saves $6.30 in medical costs.8
  • Smoking cessation programs have the potential to save almost $200 in direct and indirect medical costs per smoker.9
  • Every dollar spent on alcohol misuse screening and brief counseling saves $4 in health care costs.10

What Can Employers Do?

Forward-thinking employers know that providing 100% preventive coverage to their employees is cost-effective. With the passage of the Affordable Care Act in 2010, all non-grandfathered employer health plans — and eventually all health plans — must cover certain preventive services at no cost to their employees. However, to gain the full value of prevention benefits, employees and other beneficiaries must use them. Employers can increase the uptake of preventive services by creating evidence-based prevention and wellness programs and effectively communicating benefits.

Relevant Tools and Resources Include:

Other Preventive Services Resources

References (show references)

1 Center for Medicare & Medicaid Services. National Health Expenditures and Selected Economic Indicators, Levels and Average Annual Percent Change: Selected Calendar Years 1990-2013. Washington, DC: Center for Medicare & Medicaid Services, Office of the Actuary; 2004.

2 Institute of Medicine. The Future of the Public's Health in the 21st Century. Washington, DC: National Academy Press; 2002.

3 Milken Institute. An unhealthy America: the economic burden of chronic disease. Accessed on September 22, 2011.

4 Krauskopf L, Sherman D. UN Assembly backs steps to fight chronic disease. Thomson Reuters. 19 Sept 2011.

5 The Commonwealth Fund Commission on a High Performance Health System, Why Not the Best? Results from a National Scorecard on U.S. Health System Performance.The Commonwealth Fund. September 2006. Available from:

6 Woolf SH.A closer look at the economic argument for disease prevention. JAMA. 2009;301(5):536-538.

7 U.S. Health Care Costs. Kaiser Family Foundation. Accessed on September 22, 2011.

8 Bloom DE, Canning D, Weston M. The value of vaccination. World Economics. 2005;6(3)1-40.

9 Fitch K, Iwasaki K, Pyenson B. Covering smoking cessation as a health benefit: a case for employers. Milliman, Inc. December 2006.

10 Zalin L, Lenocker K. Alcohol screening and intervention in the trauma setting save health-care costs by preventing further injuries. UW Today. 14 Jan 2005.

Page last updated: May 24, 2013

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