In 2022, California’s economy suffered a significant impact from obesity-related health issues, with an estimated $90 billion loss in economic activity.
This led to an $11 billion deficit in the state budget, primarily due to increased healthcare costs and reduced revenue, according to a detailed report from Global Data.
The report underscores that about 28.1% of Californian adults were categorized as obese last year, with an additional 34.7% being overweight, according to data from the California Health Interview Survey.
These figures are not just statistics; they represent a significant portion of the population whose health complications are causing ripple effects throughout the economy.
Global Data’s study illustrates the broad economic impact of obesity, which includes reduced economic activity, escalated healthcare costs, premature deaths, and obesity-related unemployment.
Specifically, the study finds that obesity leads to a 2.5% reduction in California’s Gross Domestic Product (GDP) and a 3.7% loss in state revenue. Additionally, it points to 353,600 fewer adults in the workforce and a 9% wage reduction for women affected by obesity, with no similar wage impact observed among men.
Tim Dall, Executive Director of Life Sciences Consulting at Global Data, highlighted the economic ramifications of ignoring obesity.
“There’s a lot of misinformation out there about the treatment of obesity as a cost. What our study shows is there’s a cost to doing nothing,” Dall told The Center Square.
The study contrasts the potential GDP in a scenario without such high rates of obesity against actual figures, presenting a grim picture of lost opportunities.
Interestingly, the study utilized conservative cost estimates, suggesting that the real financial impact could be even higher.
It references a prior study by the Milken Institute, which pegged direct healthcare costs linked to weight at $481 billion in 2016, alongside $1.24 trillion in indirect costs due to lost economic productivity—collectively accounting for about 9.3% of the national GDP that year.
In terms of solutions, the report funded by Eli Lilly—the pharmaceutical giant behind the weight loss drug Tirzepatide—advocates for the integration of medical treatments with lifestyle modifications to manage obesity.
It notes that weight loss through medication or surgery, in combination with lifestyle changes, can be significantly effective. For instance, an obese individual losing 5% of their body weight can yield $6,080 in medical savings over a decade, with greater weight loss correlating to even larger savings.
However, the financial implications of such treatments are non-negligible. For example, the cost of Tirzepatide, marketed as Mounjaro, is over $1,000 per month, which poses a substantial burden for both the government and insurers, especially as the drug is not typically covered by insurance when used for weight loss unless the patient is also diabetic.
Legislative attempts to address these costs have faced hurdles. California State Senator Steven Branford authored SB 839, aiming to mandate coverage for weight loss treatments under state and private insurance plans, akin to other medical treatments.
Despite past contributions from Eli Lilly, Bradford’s bill was shelved due to budget constraints, leaving many Californians to rely primarily on diet and exercise—the most economical methods of managing weight.