Obesity-related costs and the economic impact of laparoscopic adjustable gastric banding procedures: benefits in the Texas Employees Retirement System

Abstract

Objective: To assess the return on investment (ROI) and economic impact of providing insurance coverage for the laparoscopic adjustable gastric banding (LAGB) procedure in classes II and III obese members of the Texas Employees Retirement System (ERS) and their dependents from payer, employer, and societal perspectives.

Methods: Classes II and III obese employee members and their adult dependents were identified in a Texas ERS database using self-reported health risk assessment (HRA) data. Direct health costs and related absenteeism and mortality losses were estimated using data from previous research. A dynamic input–output model was then used to calculate overall economic effects by incorporating direct, indirect, and induced impacts. Direct health costs were inflation-adjusted to 2008 US dollars using the Consumer Price Index for Medical Care and other spending categories were similarly adjusted using relevant consumer and industrial indices. The future cost savings and other monetary benefits were discounted to present value using a real rate of 4.00%.

Results: From the payer perspective (ERS), the payback period for direct health costs associated with the LAGB procedure was 23–24 months and the annual return (over 5 years) was 28.8%. From the employer perspective (State of Texas), the costs associated with the LAGB procedure were recouped within 17–19 months (in terms of direct, indirect, and induced gains as they translated into State revenue) and the annual return (over 5 years) was 45.5%. From a societal perspective, the impact on total business activity for Texas (over 5 years) included gains of $195.3 million in total expenditures, $93.8 million in gross product, and 1354 person-years of employment.

Limitations: The analysis was limited by the following: reliance on other studies for methodology and use of a control sample; restriction of cost savings to 2.5 years which required out-of-sample forecasting; conservative assumptions related to the cost of the procedure; exclusion of presenteeism; and no sensitivity analyses performed.

Conclusion: This analysis indicates that providing benefits for the LAGB procedure to eligible members of the Texas ERS and their dependents is worthy of support from payer, employer, and societal perspectives.

• bariatric surgery, economic impact, healthcare, laparoscopic adjustable gastric banding, LAGB, morbid obesity, return on investment, ROI, Texas Employees Retirement System