Labour productivity effects of prescribed medicines for chronically ill workers

Previous work on the labour productivity effects of chronic illness has not separated the effects of chronic illnesses from the effects of prescription medications taken to alleviate these conditions. Using nationally representative observational data, this study estimates the pure effect of chronic illness, and the marginal effect of prescription medicines, on labour productivity. As Americans continue to scrutinize health care expenditures, such estimates will play an increasing role in determining the allocation of resources for medical treatments. Estimates are presented of the costs and benefits to employers of covering prescription medications for workers aged 18-64 years afflicted with specific chronic illnesses. The effects of prescription medicines on hourly wages and days lost from work are examined for four major chronic illnesses: hypertension, heart disease, non-insulin dependent (type II) diabetes and depression. The net benefits to employers from having workers take prescription medicines for their chronic illnesses are substantial. Assuming average compliance rates are achieved, net benefits to employers in 1987 amounted to $286 per hypertensive employee, $633 per employee with heart disease; $822 per depressed employee, and $1475 per type II diabetic employee under medication from a physician. These estimated benefits accrue because prescription medications substantially lower absenteeism among chronically ill workers.