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About two-thirds of Canadians are physically inactive. As a risk factor for several chronic diseases, physical inactivity can potentially be a substantial public health burden. We estimated the direct health care costs attributable to physical inactivity in Canada, the number of lives lost prematurely each year that are attributable to a sedentary lifestyle and the effect that a reduction of 10% in inactivity levels (a Canadian objective for 2003) could have on reducing direct health care costs.We calculated summary relative risk (RR) estimates from prospective longitudinal studies of the effects of physical inactivity on coronary artery disease, stroke, colon cancer, breast cancer, type 2 diabetes mellitus and osteoporosis. We then computed the population-attributable fraction (PAF) for each illness from the summary RR and the prevalence of physical inactivity (i.e., 62%) and applied the PAF to the total direct health care expenditures for 1999 and to the number of deaths in 1995 associated with each disease to determine the health care costs and lives lost prematurely that were directly attributable to physical inactivity.About $2.1 billion, or 2.5% of the total direct health care costs in Canada, were attributable to physical inactivity in 1999. A sensitivity analysis (simultaneously varying each of the health care costs and PAF by ±20%) indicated that the costs could be as low as $1.4 billion and as high as $3.1 billion. About 21 000 lives were lost prematurely in 1995 because of inactivity. A 10% reduction in the prevalence of physical inactivity has the potential to reduce direct health care expenditures by $150 million a year.Physical inactivity represents an important public health burden in Canada. Even modest reductions in inactivity levels could result in substantial cost savings.