Climate change is increasingly straining employer-sponsored healthcare, yet many companies remain unaware of the financial risks tied to rising temperatures, poor air quality, and extreme weather events.

While climate-related economic damages have been widely studied — with one global analysis estimating a staggering $16 million in losses per hour from 2010 to 2019 — specific data on how these changes affect employer healthcare spending has been harder to come by. “Most of the focus around that is more on sustainability, which is great, but we were wondering what impact this is having on human capital. And there wasn’t really anything out there,” said Tracy Watts, senior partner and national leader for U.S. health policy at Mercer.

To address that gap, Mercer partnered with the National Commission on Climate and Workforce, part of the Health Action Alliance, to launch the Climate Health Cost Forecaster. The online tool estimates the long-term health costs of climate-linked “perils” — extreme heat, air pollution, flooding, and hurricanes — using a combination of weather data, epidemiological studies, and Mercer’s health claims data.

The forecast, which calculates impacts over a ten-year period based on an employer’s size, location, and industry, fills a significant knowledge gap, Watts said. She pointed to Mercer’s global survey from late 2024, which revealed that 77% of employees reported being affected by climate-related events, citing effects ranging from healthcare access issues to poor sleep caused by high temperatures.

Watts explained that the tool maps climate perils to specific health outcomes: “Extreme heat can increase incidences of dehydration, heat stroke and cardiovascular and respiratory illnesses,” while poor air quality is tied to respiratory and allergy-related issues. Other risks include early labor among pregnant individuals, injuries during flooding events, and diseases from contaminated water sources.

Ellen Kelsay, president and CEO of the Business Group on Health, called climate change a “threat multiplier.” She added, “Extreme climate-related events such as hurricanes, wildfires and floods, can displace people from their homes, causing great distress and difficulty in seeking health care services. These events also are linked to acute disruptions such as power outages and supply challenges.”

Similarly, Jessica Martinez, executive director of the National Council for Occupational Safety and Health, warned of long-term health threats. “There are also long-term health concerns associated with heat and environmental stressors, such as chronic kidney disease and worsening of conditions like asthma and diabetes,” she said.

Martinez highlighted the disproportionate burden on low-wage, high-risk workers — particularly in agriculture, construction, and hospitality. Many in these roles, she noted, “don’t have access to healthcare at all, let alone preventive care. Even when they do seek medical help, providers rarely ask if symptoms like dizziness, fainting, or chronic pain are related to their jobs. So the conditions go underreported, misdiagnosed, and untreated. This systemic failure keeps the suffering invisible and allows dangerous conditions to continue unchecked.”

Watts emphasized that even small changes in climate-related costs can matter to organizations. “Any [chief financial officer] of an organization knows what their health benefits spend is — it’s a big number. They know how much it goes up every year,” she said. Even a 1% increase linked to climate could have major financial implications.

Despite that, many employers still neglect to factor climate into their workforce health planning. Martinez warned, “Failing to act not only puts workers’ lives at risk but also leads to turnover, burnout, and long-term harm that directly affects business sustainability.”

Cost impacts vary widely by geography. In Portland, Oregon, for instance, air quality is the most pressing climate health risk, while Hartford, Connecticut, and Burlington, Vermont, are more exposed to extreme heat. Watts added that cities like Boston, New York, and Pittsburgh face some of the highest risks nationwide.

Martinez closed with a stark reminder: “It’s not employer-sponsored insurance plans bearing the brunt — it’s the workers themselves. They are the ones paying out of pocket, skipping care, or suffering in silence when their symptoms are dismissed or misdiagnosed. Many workers don’t even report heat-related illness because they fear losing hours or their jobs.”

Originally reported by Ryan Golden in Construction Dive.