Study Estimates Occupational Injuries and Illnesses Cost $250 Billion

Study Estimates Occupational Injuries and Illnesses Cost $250 Billion

Comprehensive Look Shows Astronomical Increase

 By John M. Stahl, Esq.

A study by J. Paul Leigh, Ph.D., estimates that direct and indirect costs of occupational injuries and injuries in 2007 was $250 billion. This is a 71-percent increase since 1992.

Factors include:

  • 81-percent medical inflation;
  • 48-percent general inflation;
  • increased fringe benefits costs due to higher health-care insurance costs and other factors; and
  • increased life expectancies.

The study concludes as well that workers’ compensation coverage providers only pay 25 percent of these expenses.

Direct costs consist of medical expenses associated with these injuries and illnesses. Indirect costs include home-care and other non-medical services, lost productivity, and expenses associated with temporarily and permanently replacing injured and sick workers

Medical Expense Estimates of Work-related Injuries

The U.S. Bureau of Labor Statistics’ (BLS) Survey of Occupational Injuries and Illnesses (SOII) estimates that 3,765,600 non-fatal work-related injuries occurred in 2007. This does not include injuries that government workers sustained and other incidents that were outside the SOII’s scope.

Factoring in excluded industries, and adjusting for underreporting of injuries, the study estimates that another 5,126,866 non-fatal work-related injuries occurred in 2007.

The statistics show that more than 6 million of the roughly 8.5 million non-fatal injuries did not require time off work.

Another approximately 1,000,000 workers were temporarily totally disabled, and an excess of 500,000 workers experienced total or partial permanent disability. Much of the $39.38 billion in medical costs associated with these three categories is attributable to caring for permanently disabled workers.

The estimated $.31 billion in medical costs related to the approximately 5,657 fatal work-related injuries in 2007 translates to an average medical cost of roughly $56,000 for each incident.

The study reports as well that the total of roughly 8.5 million injuries in every category required nearly $47 billion in medical care.

Medical Expense Estimates of Work-related Illnesses

The top three illnesses in the study’s scope with the highest mortality rate are:

  1. All types of cancer
  2. Chronic obstructive pulmonary disease (COPD)
  3. Circulatory disease

The rankings differ regarding medical costs. Under this criterion, circulatory disease rises to number one, cancer is number two, and COPD is third.

The study explains the rankings by referring to medical costs reflecting hospitalization expenses. The study notes that asthma requires costly medical care but does not cause many deaths. Another factor is that age limits for circulatory diseases are lower than for cancer or COPD.

Finding that most medical expenses related to occupational illnesses relate to fatal diseases reflects that the percentage of fatal cases in the study is much higher for illnesses than injuries. This results in only 1.7 percent of these costs relating to injuries.

The estimated number of fatal disease cases is 53,445. The estimated number of non-fatal disease cases is 462,704.

Comparing Costs of Injuries and Illnesses

The study concludes that total costs associated with work-related injuries equals roughly 77 percent of the $250 billion associated with occupational injuries and illnesses. The findings reveal as well that “medical costs took a larger share of the total costs of disease than of injury, and most of the costs associated with injuries was for nonfatal cases, whereas the opposite was true for diseases.”

It was discovered as well that the illness fatality rate is almost 10 times higher than the fatality rate regarding injuries. These illness-related deaths generated more than seven times the medical expenses of fatal injuries.

Although medical costs associated with fatal illnesses greatly eclipse that expense regarding fatal injuries, the difference is less significant regarding indirect costs. For example, 21.9 percent of lost wages were attributed to fatal injuries and 78.1 percent of that indirect cost was associated with fatal illnesses.

On a larger scale, the study determines that indirect costs comprise nearly 76 percent of the total costs associated with fatal and non-fatal injuries. This percentage falling to 64 percent regarding occupational illnesses reflects factors that include the tendencies of people with those diseases to pass away more quickly than those who sustain work-related injuries and for older people to be more prone toward these diseases than younger people.

Bottom Line

Providing injured workers medical care and other services is more expensive than some studies have indicated, and the trend is for this to remain high regardless of the incident rate.

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New 2011 Edition Now on Sale: Occupational Injuries and Illnesses, Brian Caveney, MD, JD, MPH, Editor-in-Chief