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VERISK PERSPECTIVES | AN ISO EMERGING ISSUES REPORT

How the obesity epidemic could impact insurers

By: Lucian McMahon, Narges Dorratoltaj, Thananya Saksuriyongse

In the 1990s, obesity rates spiked to become the leading cause of preventable death worldwide. Nearly three decades later, the percentage of U. S. residents who have obesity continues to be trending upwards. In 2017-2018, 42.4 percent of Americans were obese,1 a stark contrast to the roughly 13 percent in 1960.2

What has precipitated such a dramatic increase in obesity rates over just half a century? What are the health impacts—both short- and long-term—that obesity can contribute to? These are just a couple of questions that experts worldwide are diving into, and their findings could be significant. Over time, continued research could more concretely identify specific causes of obesity, perhaps implicating different industries in a growing issue that costs the United States roughly $190 billion per year in medical costs.3

What is obesity?

The World Health Organization (WHO) defines obesity as abnormal or excessive fat accumulation that presents a health risk. A crude population measure of obesity is the body mass index (BMI), a person's weight (in kilograms) divided by the square of his or her height (in meters). The Centers for Disease Control (CDC) classifies anyone with a BMI of 30 or higher as within the obese range.4 Moreover, high BMI is also associated with an increase in blood pressure and low-density lipoprotein (LDL) cholesterol.

A CDC data brief in 2020 estimated that from 2017-2018 middle-aged adults (40-59 years old) had the highest obesity rate at 44.8 percent, compared to 40 percent for people aged 20-39 years old and 42.8 percent for people over 60 years old. The CDC brief further indicates no significant differences in rates of obesity between males and females.5

The risk factors associated with obesity

While obesity rates are high across the United States, a more granular analysis indicates that specific groups of people and geographical locations are more susceptible to obesity. Figure 1 shows the distribution of obesity prevalence among adults by U.S. counties in 2017.6

Obesity Map Us Counties

Source: CDC 7

The development of obesity is multifactorial and includes genetic, behavioral, and societal inputs.

One of the major contributors to obesity is diet. Individuals from a lower socioeconomic status tend to have less access to healthy food and are more likely to consume fast foods with higher sugar content. It’s important to note that the lack of access to healthier foods isn’t necessarily due to lack of knowledge, but the consequence of higher costs associated with healthy foods and the longer distance that often needs to be traveled to access nutritional food. Consequently, so-called “food deserts,” or neighborhoods with limited access to affordable, nutritious foods, often coincide geographically with regions with higher obesity prevalence in the United States.8

Another important factor that exacerbates obesity risk is a lack of exercise. Observations9 10 show that lower-income neighborhoods, specifically in rural areas, are not considered walkable because of fewer available connected sidewalks, paths, bike routes, and public transit. In these regions, cars are the main means of travel to even nearby destinations. Regions that lack the infrastructure that encourages physical movement, and thus require a quotidian dependence on motor vehicles, tend to overlap geographically with food desert regions in the United States.

Some studies indicate that psychosocial factors, such as more targeted marketing of unhealthy products and/or fast-food establishments toward minorities, may contribute to higher rates of obesity among those communities as well.11 12 13 14

Impacts on liability insurance

As the rates and associated costs of obesity continue to rise, there have been efforts to hold food-related companies (e.g., fast food outlets, food and beverage manufacturers, and retailers) responsible for the obesity-related health problems of consumers. For example, some food companies might be sued for:

  • failing to warn about or disclose potential obesity-risks in certain food and beverage products
  • deceptively advertising or marketing their food and beverage products
  • knowingly incorporating allegedly addictive or harmful additives and ingredients

Some have likened the potential impacts (and purposes) of such food lawsuits to tobacco litigation. To date, there hasn’t yet been a similar wave of successful class-action lawsuits against food/beverage manufacturers, wholesalers, or retailers. However, the potential similarities between obesity and tobacco litigation have caused concern among companies along the food supply chain and their liability insurers.15

On the other hand, some have argued16 against comparing tobacco litigation with obesity litigation, in part because of the substantive differences in the products in question17 (e.g., food is necessary for survival while cigarettes are considered a luxury good).

Food lawsuits and “cheeseburger laws”

In the early 2000s, there were attempts to hold various food companies liable for allegedly making plaintiffs obese.

Most famously, in Pelman v. McDonald's Corp., 237 F. Supp. 2d 512 (S.D.N.Y. 2003) (2003), a class action was brought on behalf of children with obesity against McDonald’s.18 The original lawsuit alleged, among other things, that McDonald’s products were unhealthy and inherently dangerous. An amended lawsuit alleged, in part, that McDonald’s processed foods created a “danger and a hazard” and that the company was negligent of failing to warn consumers; and that the company’s marketing practices amounted to “fraudulent and deceptive business practices.”19 The lawsuit ultimately failed and was derided at the time by the defendants as “frivolous litigation.”20

Another lesser-known case S.F. v. Archer Daniels Midland Co. was filed against high fructose corn syrup producers, alleging negligent design of the product and failure to warn about the presence of said syrup in their products.21 This suit was also unsuccessful.

Other lawsuits have also been filed against companies alleging mislabeling/false advertising for implying that a product is healthy or contains certain ingredients.22 Some food and beverage companies may also be sued for their marketing practices, particularly if these target children. For example, in 2010, McDonald’s was sued for including toys with their Happy Meals.23 The lawsuit was eventually dismissed, but there is a similar lawsuit pending in Canada, brought in 2018.24

In response to some of these lawsuits, several states have passed so-called “commonsense consumption” laws, which typically seek to preclude civil liability for companies arising under state law for allegedly causing weight gain, obesity, or an associated condition, with some exceptions.25 These laws are colloquially termed “cheeseburger laws.” 26 In 2005, the federal Personal Responsibility in Food Consumption Act (2005), known as the “Cheeseburger Bill,” would have barred civil actions alleging “any injury related to a person's accumulated acts of consumption of food and weight gain, obesity, or any associated health condition.”27 The bill failed to pass the Senate.

Factors driving the risk

Despite early setbacks, it’s possible that obesity-related lawsuits could resurface and become successful due to several factors.

Changes in public opinion: Public attitudes towards obesity may change. When the first tobacco lawsuits were filed, some members of the public derided them on the grounds that smokers freely assumed the risks of smoking. However, this attitude shifted against tobacco companies as the awareness spread of the dangers of tobacco use and after the discovery of documentary evidence suggesting that cigarettes were deliberately designed to be addictive. 28

Early obesity lawsuits were similarly ridiculed among the public because the plaintiffs were supposedly obese due to their own consumption choices.29 But this attitude may be changing. One indication is the American Medical Association’s 2013 designation of obesity as a “disease” and not a “condition.”30 There have already been some (largely unsuccessful) Americans with Disabilities Act (ADA) lawsuits related to obesity.31 These attitudes may further shift as the costs of obesity continue to rise, and as the disparate impacts of obesity on underprivileged or vulnerable populations increase.32

New legal strategies: The nature of lawsuits may also change. For example, there may be efforts to argue that some foods and beverages are addictive or create addiction-like responses in some individuals, making it more difficult to argue that consumers are free to choose their foods and beverages.33

Similarly, it’s been argued that unhealthy food and beverage products, and the marketing thereof, could disproportionally affect children who might not be aware of the risks of consuming unhealthy food. This, in turn, might lead to obesity-related litigation on behalf of vulnerable populations like children. Food/beverage companies might be held liable if the risks of certain foods are beyond the knowledge of the average consumer.34 Lawsuits might also be brought alleging that certain food packaging and labeling suggests health benefits that may be spurious.

There may also be new obesity-related lawsuit targets. Early lawsuits targeted fast-food companies. However, there may be increased litigation against finished food products sold in supermarkets. Many Americans with obesity buy processed food in attractive packaging, and it has been argued that the manufacturers of processed/packaged foods could become litigation targets.35

Factors mitigating the risk

On the other hand, there may be some factors that could stem successful obesity-related lawsuits. For example, there continue to be difficulties in proving causation, including linking specific food and beverage companies to an individual plaintiff’s obesity-related health outcomes. Additionally, there continue to be disputes about whether food and food additives can truly be addictive in the same sense that, say, nicotine is.

Food laws and regulations may also anticipate obesity-related lawsuits. The U.S. Food and Drug Administration (FDA) regulates food labeling, ingredients, and food safety – and can thereby take regulatory actions that could influence food/beverage company exposure to litigation. For example, in 2015, the FDA determined that the source of artificial trans-fat can no longer be added to food.36 Trans fat may increase the risk of developing heart disease and stroke.37

Obesity’s impact on life and health insurance

Different studies have quantified the estimations of obesity's impact on mortality. For example, a 2016 meta-analysis of 239 prospective studies in more than 30 countries indicated that the hazard ratio (HR) tended to increase alongside a higher BMI.38 A hazard ratio is a probability of events in a case group, compared to the probability of events in a control group, to evaluate if having a condition impacts the event of interest.

Due to the increase in the number of individuals with obesity in recent decades, it may be important for decision-makers to quantify the impact of obesity on all-cause and cause-specific mortality. For that purpose, the hazard ratio is an appropriate measure that can quantify the role that increasing BMI may have on mortality rate. A hazard ratio higher than 1 implies the possible correlation between obesity and a higher mortality rate. Table 1 below is based on this study and reflects the uptick in hazard ratio as BMI increases.

Table 1 Hazard Ratio Of Premature Mortality By Bmi Range

Source: The Global BMI Mortality Collaboration, 2016.39

Obesity can pose long-term health consequences and has links to many other diseases, including heart disease, stroke, type 2 diabetes, kidney disease, musculoskeletal disorders, and some cancers (including breast, prostate, colon, liver, and kidney). Additionally, high BMI is also associated with an increase in blood pressure and LDL cholesterol.

Table 2 reflects data from the aforementioned meta-analysis and illustrates the mortality due to various causes, which all generally appear to increase among people with obesity.

Chart2

Source: The Global BMI Mortality Collaboration, 2016.40

Moreover, people with obesity may have a higher chance of suffering accidental injuries that could be more difficult to recover from, as well as being more susceptible to sustain further injuries. This can have various impacts on health insurance. For example, medical costs for people with obesity were, on average, $1,429 higher than those of normal weight. Annual health care costs of obesity related to disability are also estimated to be roughly $44 billion.41

Obesity outlook

With the upward trend of obesity prevalence in the United States, there are still many unknowns associated with the epidemic's long-term impact on younger generations. Public health policies and practices focused on decreasing the incidence of obesity among children may have future benefits for society and life, health, and liability insurers.

Authors
Lucian McMahon, CPCU, AU-M, ARM-E is manager, research and modeling for Arium at AIR Worldwide at Verisk. Lucian can be reached at LMcMahon@air-worldwide.com.
Narges Dorratoltaj, Ph.D, MPH, is principal scientist, research and modeling at AIR Worldwide at Verisk. Narges can be reached at NDorratoltaj@air-worldwide.com.
Thananya Saksuriyongse is senior scientist, research and modeling at AIR Worldwide at Verisk. Thananya can be reached at TSaksuriyongse@air-worldwide.com.


1. Craig Hales et al., “Prevalence of Obesity and Severe Obesity Among Adults: United States, 2017-2018,” Center for Disease Control and Prevention, February 2020, < https://www.cdc.gov/nchs/products/databriefs/db360.htm >, accessed on November 17, 2020.

2. Cheryl Fryar et al., “Prevalence of Overweight, Obesity, and Extreme Obesity, and Extreme Obesity Among Adults Aged 20 and Over: United States, 1960-1962 Through 2013-2014,” Centers for Disease Control and Prevention, July 18, 2016, < https://www.cdc.gov/nchs/data/hestat/obesity_adult_13_14/obesity_adult_13_14.htm >, accessed on November 17, 2020.

3. “Obesity accounts for 21 percent of U.S. healthcare costs, study finds,” Science Daily, April 9, 2012, < https://www.sciencedaily.com/releases/2012/04/120409103247.htm >, accessed on November 17, 2020.

4. Lauren Leatherby et al., “How the Virus Transformed the Way Americans Spend Their Money,” New York Times, April 11, 2020, <  https://www.nytimes.com/interactive/2020/04/11/business/economy/coronavirus-us-economy-spending.html >, accessed on November 17, 2020.

5. “Prevalence of Obesity and Severe Obesity Among Adults: United States, 2017-2018”

6. “U.S. Diabetes Surveillance System,” Center for Disease Control and Prevention,” < https://gis.cdc.gov/grasp/diabetes/DiabetesAtlas.html >, accessed August 14, 2020.

7. “U.S. Diabetes Surveillance System” Reference to specific commercial products, manufacturers, companies, or trademarks does not constitute its endorsement or recommendation by the U.S. Government, Department of Health and Human Services, or Centers for Disease Control and Prevention. This map is freely available on the CDC website. https://gis.cdc.gov/grasp/diabetes/DiabetesAtlas.html. This is a user-generated report. The findings and conclusions are those of the user and do not necessarily represent the views of the CDC.

8. Ruth Petersen, “Racial and Ethnic Disparities in Adult Obesity in the United States: CDC’s Tracking to Inform State and Local Action,” Preventing Chronic Disease, April 11, 2019, < https://www.cdc.gov/pcd/issues/2019/18_0579.htm >, accessed on November 17, 2020.

9. Patrick Krueger et al., “Mind the Gap: Race, Ethnic and Socioeconomic Disparities in Obesity.” Current Diabetes Reports, November 2015, <  https://doi.org/10.1007/s11892-015-0666-6 >, accessed on November 17, 2020.

10. Samuel Towne et al., “Examining the Role of Income Inequality and Neighborhood Walkability on Obesity and Physical Activity among Low-Income Hispanic Adults,” Journal of Immigrant and Minority Health, August 1, 2018, < https://doi.org/10.1007/s10903-017-0625-1 >, accessed on November 17, 2020.

11. F. Fleming-Milici et al., “ Television food advertising viewed by preschoolers, children and adolescents: contributors to differences in exposure for black and white youth in the United States,” Pediatric Obesity, December 15, 2016, < https://onlinelibrary.wiley.com/doi/abs/10.1111/ijpo.12203 >, accessed on November 17, 2020.

12. J.L. Harris et al., “A qualitative assessment of US Black and Latino adolescents' attitudes about targeted marketing of unhealthy food and beverages,” Journal of Children and Media, April 28, 2019, < https://www.tandfonline.com/doi/abs/10.1080/17482798.2019.1604394 >, accessed on November 17, 2020.

13. M Hyary et al., “Hispanic youth visits to food and beverage company websites,” Health Equity, September 1, 2017, < https://www.liebertpub.com/doi/10.1089/heq.2016.0026 >, accessed on November 17, 2020.

14. F. Fleming-Milici et al.,”Amount of Hispanic youth exposure to food and beverage advertising on Spanish- and English-language television,” JAMA Pediatrics, August 1, 2013, < https://pubmed.ncbi.nlm.nih.gov/23778639 >, accessed on November 17, 2020.

15. Daniel Chefitz et al., “Are You Prepared for Obesity Litigation?” Food Technology Magazine, September 1, 2014, < https://www.ift.org/news-and-publications/food-technology-magazine/issues/2014/september/features/obesity_litigatio >, accessed August 14, 2020.

16. Joseph P. McMenamin et al., “Not the Next Tobacco: Defense to Obesity Claims,” Food and Drug Law Journal, 2006, < https://www.mcguirewoods.com/news-resources/publications/products_liability/obesity.pdf >, accessed on November 17, 2020.

17. Kathleen Meister, “Foods Are Not Cigarettes: Why Tobacco Lawsuits Are Not a Model for Obesity Lawsuits,” American Council on Science and Health, July 2006, < https://www.acsh.org/sites/default/files/Foods-Are-Not-Cigarettes-Why-Tobacco-Lawsuits-Are-Not-a-Model-for-Obesity-Lawsuits.pdf >, accessed on November 17, 2020.

18. “Are You Prepared for Obesity Litigation?”

19. Michelle Mello et al., “The McLawsuit: The Fast-Food Industry and Legal Accountability for Obesity,” Health Affairs, November 2003, < https://www.healthaffairs.org/doi/full/10.1377/hlthaff.22.6.207 >, accessed on November 17, 2020.

20. Jonathan Wald, “McDonald’s obesity suit tossed,” CNN Money, February 17, 2003, < https://money.cnn.com/2003/01/22/news/companies/mcdonalds/ >, accessed on November 17, 2020.

21. “San Francisco v. Archer Daniels Midland Co.,” < https://casetext.com/case/san-francisco-v-archer-daniels-midland-co >, accessed on November 17, 2020.

22. Emily Bryson York, “McDonald’s sued for marketing Happy Meals to children,” Los Angeles Times, December 15, 2010, < https://www.latimes.com/archives/la-xpm-2010-dec-15-la-fi-mcdonalds-lawsuit-20101215-story.html >, accessed August 14, 2020.

23. “Commonsense Consumption Act,” American Legislative Exchange Council, < https://www.alec.org/model-policy/commonsense-consumption-act/ >, accessed August 14, 2020.

24. Jessica Murphy, “Father Sues McDonald’s Over ‘Advertising’ of Happy Meals,” BBC, November 20, 2018, < https://www.bbc.com/news/world-us-canada-46243072 >, accessed on November 17, 2020.

25. Grace Thompson, “How Commonsense Consumption Acts Are Preventing “Big Food” Litigation,” Seattle University Law Rev, 2018; < https://digitalcommons.law.seattleu.edu/cgi/viewcontent.cgi?article=2517&context=sulr >, accessed on November 17, 2020.

26. Keller R. H.R.554 - 109th Congress (2005-2006): Personal Responsibility in Food Consumption Act of 2005, October 21, 2005, < https://www.congress.gov/bill/109th-congress/house-bill/554>, accessed August 14, 2020.

27. Michael Malone, “Obesity Alone Is Not a Disability Under the ADA,” SHRM, September 10, 2019, < https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/court-report-obesity-ada.aspx >, accessed on November 17, 2020.

28. San Francisco v. Archer Daniels Midland Co., 594 F. App’x 11 | Casetext Search + Citator. < https://casetext.com/case/san-francisco-v-archer-daniels-midland-co >, accessed August 14, 2020.

29. “The McLawsuit: The Fast-Food Industry and Legal Accountability for Obesity”

30. Martha Neil, “Obesity is a disease, AMA says, aiding weight-related disability claims,” ABA Journal, July 23, 2013, < https://www.abajournal.com/news/article/obesity_is_a_disease_ama_says_aiding_obesity-related_disability_claims2 >, accessed on November 18, 2020.

31. “Economic Costs. Obesity Prevention Source,” Harvard School of Public Health, October 21, 2012, < https://www.hsph.harvard.edu/obesity-prevention-source/obesity-consequences/economic/ >, accessed August 14, 2020.

32. Jada Fehn, “The assault on bad food: tobacco-style litigation as an element of the comprehensive scheme to fight obesity,” Food Drug Law Journal, 2012, < https://pubmed.ncbi.nlm.nih.gov/24624649/ >, accessed on November 18, 2020.

33. “The McLawsuit: The Fast-Food Industry and Legal Accountability for Obesity”

34. San Francisco v. Archer Daniels Midland Co., 594 F. App’x 11 | Casetext Search + Citator. https://casetext.com/case/san-francisco-v-archer-daniels-midland-co. Accessed August 14, 2020.

35. “Nutrition C for FS and A. Trans Fat,” Food and Drug Administration, December 2018, < https://www.fda.gov/food/food-additives-petitions/trans-fat>, accessed on August 14, 2020.

36. “Trans Fats,” Heart.org, 2020, < https://www.heart.org/en/healthy-living/healthy-eating/eat-smart/fats/trans-fat >, accessed on August 14, 2020.

37. Ibid

38. ED Angelantonio et al., “Body-mass index and all-cause mortality: individual-participant-data meta-analysis of 239 prospective studies in four continents,” The Lancet, 2016;< doi:10.1016/S0140-6736(16)30175-1 >, accessed on November 18, 2020.

39. Ibid

40. Ibid1

41. “Disability and Obesity, “Centers for Disease Control and Prevention, September 6, 2019, < https://www.cdc.gov/ncbddd/disabilityandhealth/obesity.html >, accessed August 14, 2020.