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How Bicycling Cuts Health Care Costs for Businesses

Leon Kaye | Tuesday August 27th, 2013 | 5 Comments

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Bicycling, the business case for bicycling, cycling, healthcare costs, healthcare, QBP, Thomas Gotschi, Obamacare, obesity

Bicycling in Portland saves local companies money due to reduced health care costs

Many of us have worked for organizations that offer discounted health club memberships, but what about a discount for a bicycle? With all the fretting over Obamacare here in the U.S., one way in which businesses can save money on health care costs is by encouraging bicycling, even occasionally, as an option for employees to move to and from work. From America’s bicycling hub of Portland to countries around the world, evidence suggests employees who cycle to work can save their companies money.

To that end, bicycling even became one of the planks, albeit a small one, within President Obama’s Affordable Health Care Act (AHCA). But as MarketWatch has explained, a fund for bicycling infrastructure became a straw man and object of ridicule for opponents of the law. Many cities hence ignored any funds tinged with the “Obamacare” label to build expanded or new bicycling infrastructure in their communities. Exceptions can be found, however. Madison County in Illinois recently leveraged an AHCA grant to install new bicycle racks, and Austin, TX, scored similar funds so a local nonprofit can teach basics about bicycling in an urban setting.

Discussions over Obamacare aside, concerns over health, especially Americans’ struggle with sedentary lifestyles and obesity, are in part behind Americans’ increased interest in bicycling. Meanwhile the decrease in funds for large public transportation projects, and concurrent political infighting, has often made those expensive options politically toxic—so municipalities are exploring other options for bike lanes and other bicycle-friendly ventures as a cost-effective way to boost mobility within their communities. But this is not just about traffic: evidence suggests bicycling can save companies money, especially on those ever-spiraling health care costs.

So what are potential health care savings as the result of employees taking a bicycle to work?

Let’s start with the big picture worldwide. Countries around the world are only starting to tabulate health care savings due to bicycling. Denmark, which plans to expand its bicycle highway network after such a project in Copenhagen’s suburbs was judged a success, estimates the country saves €40 million annually ($53.3 million) on health care costs. That is less than one percent of what Denmark spends on its annual health care budget, but still an impressive sum in a nation of 5.6 million people. On the other side of the world, a study in Australia suggested AUD 227 million ($207 million) was saved in health care costs during 2008.

So why would bicycling save businesses and society money on health care expenses? Increased cardiovascular health is the obvious reason that comes to mind. But other factors add to reduced health care costs, such as decreased stress and therefore a boost for mental health; increased muscle build while minimal impact on joints; and some evidence even suggests bicycling may improve the immune system. And since companies bear the brunt of health care costs in America, health care plan administrators should consider a bicycling program that could contribute to improved employee health and, therefore, lower costs. Of course, bicycling has its risks, such as inhaling pollutants and accidents. Overall, bicycling fatalities are on a downward trend, but statistics on the number of cyclists and miles they commute are not robust as they are for automobile drivers and the distances they travel to work. Overall, bicycling’s health benefits, however, may very well outweigh the risks to injury.

On average, the estimated health benefits of cycling were substantially larger than the risks relative to car driving for individuals shifting their mode of transport.” – National Institutes of Health, 2010.

Stateside, data suggests America’s privately-financed health care system could reap savings, too.

A study out of the U.S. bicycling capital of Portland, OR should give health care insurance companies and employers notice that supporting bicycling is in their best interests. Thomas Gotschi, a Swiss PhD, published a study in the Journal of Physical Activity and Health that suggested health care savings will increase in the Portland area as the city expands its bicycling infrastructure. Gotschi’s research broke down the costs into two monetized health benefits: health care savings and value of statistical life savings. The city continues to invest in bike lanes and other infrastructure necessary for a strong bicycling system and, in fact, that investment could increase in the range of $138 to $605 million by 2040. Those monies, in turn, according to Dr. Gotschi, could result in health care cost savings of anywhere from $388 to $594 million. Add the savings in statistical lives, and total savings could add up from $7 to $12 billion. Dr. Gotschi’s research, with his numbers crunched another way, reveals just half an hour of bicycling a day can result in health care savings of $544 per person, per year—not an insignificant amount in an era of rising premiums.

But it is not only bicycle-crazy Portland that could benefit from further health care savings. Another study in the journal Environmental Health Perspectives analyzed commuting patterns across the 11 largest cities within the Great Lakes region and presented compelling numbers. If people would complete half of the commutes of five miles or less by bicycle instead of automobiles, the region could save $7.3 billion in health care costs and 1,100 lives would be saved annually, even if average cycling days totaled 124 days a year when considering the region’s winter climate.

One Midwestern company benefiting from a robust bicycling incentive plan with measurable health care savings is QBP (Quality Bicycle Products), a bicycle products distribution firm based in the Twin Cities region. The 464-employee company runs a “health reward” program that incentivizes employees to cycle to work. First, employees score a $110 credit with which they can buy QBP products for their own personal use. They also have a secure place to lock their bikes and have showers onsite. But the real savings are from the company’s policy to pay employees $3 for each day they cycle to work. About 100 employees have signed on to cycle to QBP’s Bloomington headquarters, and the company ends up paying out about $45,000 annually to maintain this program.

QBP has found that not only do cyclists have overall better health, but they save the company’s health insurance provider about $200,000 in reduced health care claims annually based on a comparison with their co-workers who decline to participate in the program. QBP’s insurer also estimates the company’s cycling program prevents about $300,000 in lost productivity per year. And while health care costs for American companies rose on average 24.6 percent between 2009 and 2011, QBP’s overall health care costs declined 4.4 percent over the same period.

For bicycle commutes to increase, far more must happen than incentive programs similar to the one at QBP. Communities need more bike paths and lanes, and more insurers need to understand the overall business case for bicycling. But as the population ages and talent is harder to find and retain, a creative bicycling program will not only make a company stand out, but generate savings on health care costs—one of the biggest expenses companies of all sizes struggle with daily.

[Image credit of Portland, OR: Leon Kaye]


▼▼▼      5 Comments     ▼▼▼

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  • Al Lewis

    Much as I love to bicycle to work (and everyhwere else), I seriously doubt these healthcare savings numbers for two reasons. First, the people who would/do ride to work are not the ones who are at risk for wellness-sensitive medical events. Second, they are much more likely to have accidents (as I did, though fortunately not serious) than drivers.
    Denmark is a bit different — they are Bike Nazis and indirectly but heavily penalize people who drive, thus bringing many more people into the realm of cycling somewhat against their will, something no company here would be willing to do.
    So consider cycling and bike paths on their recreational, environmental, and convenience merits — there is plenty to recommend them without making up healthcare savings numbers

    • Matt Meskill

      Do you have evidence to back up your serious doubts? I believe driving is statistically more dangerous than cycling. It’s also interesting the terms you use regarding Denmark: Nazis, penalize, against their will. I think it’s telling. Finally, if you’re going to accuse the author of “making up healthcare savings numbers” I believe the onus is on you to show proof, to back up your accusation.

      • Cynic13

        “I believe driving is statistically more dangerous than cycling.”

        This is preposterous and doesn’t stand up to even brief reflection.

        Rates are subject to many adjustments but the best estimates put the the fatality rate per mile traveled for cyclists at ten to thirty times that for motorists. Non-fatal injuries are extremely high for cyclists but comparatively rare for automobiles.

        I am a bicycle commuter, and a credible attack is made on my life every day. In roughly 25,000 miles of cycling I’ve been concussed twice and knocked off my bike on many occasions. In 500,000 miles of driving (with a couple of severe accidents as passenger) I’ve never come close to even a scratch.

        I love cycling and I am an expert, careful rider. But to rationally address risk and benefit, I would use my car for transportation and a gym for exercise.

        • Matt Meskill

          It’s not preposterous – just mis-stated. I shouldn’t have said “statistically.” I meant in overall numbers. I also said, “I believe” meaning that I’m not making a claim to fact. I understand the rates are probably higher for cyclists but motorists are a big part of that. I also believe that cycling accidents/injuries are less frequent than falling down stairs or slipping in the tub. My overall concern was re: Al Lewis’ comment.

        • Joshua Putnam

          Focusing on the accidental death rate alone is misdirected. The overall safety of cars vs. bikes needs to evaluate the risk of all-cause premature mortality. Peer-reviewed public health data from multiple continents consistently show that the overall risk of an early death goes down for cyclists — the health benefits outweigh the accident risks by an order of magnitude or more.

          Cardiovascular disease is a far larger cause of death than traffic accidents, and people who bicycle a very modest 25 miles per week cut their risk of coronary heart disease by about 50%. Bicycle commuting also reduces rates of diabetes, osteoporosis, and colon cancer, to name a few.

          Even a significant increase in accident rates does not outweigh these huge benefits from bicycle commuting. In the UK, which has a significant bicycle accident rate and very low helmet usage, life years gained from cycling exceed years lost to accidents 20-to-1.