While obesity surgery is increasing in popularity, the figures show for the first time that the benefits of the procedure for the average patient fall far short of the costs, making simpler alternative treatments more cost-effective.
In 2007-08 it was estimated a quarter of Australians over 18 to be obese, about 8.4 per cent increase from three years earlier. Even faster is the rise of obesity surgery demands.
Figures released show that while it costs $10,935 for a single gastric banding surgery, the procedure saves only $7567 over the patient's remaining lifetime on average, costing the system $3366 overall.
The analysis commissioned by Medibank Private, found that drug treatments for obesity are more cost-effective, as they cost $1566 for a benefit of $2174 over their remaining life.
The best alternatives were lifestyle programs guiding patients how to eat and exercise better.
Despite their lower success rate - 11 per cent for lifestyle programs compared with 8 per cent for drugs and 28 per cent for surgery - their much lower cost meant they were the most cost-effective, achieving a benefit of $2846 for a cost of just $1081.
The research conducted by the consultancy firm KPMG Econtech found the only patients for whom obesity surgery might be cost-effective were the most severely obese.
Medibank Private, like other funds, is experiencing increasing claims for obesity surgery.
In just two years, the number of its members claiming for gastric banding or gastric bypass surgery has nearly doubled from 1752 in 2006-07 to 3848 in 2008-09.
The benefits paid out by Medibank for obesity surgery also greater than before, over the same period, increasing from $9.46 million in 2004-05 to $30.2 million in 2008-09.
Medibank's executive general manager, Julie Andrews said the growth in obesity and bariatric surgery was alarming.
Health fund NIB recently announced it was cutting entitlements for obesity surgery from two of its products, but a Medibank spokesperson said his fun had no intention of following the move.
Nicola Roxon, Federal Health Minister said it was clear that we have a problem in this country with overweight and obesity.
Ms Roxon said, One of the most important initiatives that we are trying to put in place is Australia's first dedicated Preventative Health Agency.