Economics of Diabetes

Diabetes Management in the Workplace

Building a Business Case: Economics of Diabetes

The costs related to treating diabetes continue to rise, driven primarily by the aging population and higher medical costs. Co-morbidities like high blood pressure, obesity and hyperlipidemia, and the complications of non-compliance and non-adherence also drive up the overall cost of care.6

Using data from the Kaiser Family Foundation, the American Diabetes Association’s (ADA) cost calculator estimates that for a company with 1,000 employees:7

  • 120 employees have diabetes
  • 34 are undiagnosed
  • 370 have prediabetes
  • $4 million is the average annual insurance cost for employees with diabetes and prediabetes
  • $751,682 is the annual increased cost if 25% of employees with prediabetes develop diabetes

Iceberg_DTK_resized.jpgMedical expenses for an individual with diabetes are about 2.3 times higher than a person without diabetes. But this is just the tip of the iceberg.

More than 25% of people with diabetes are undiagnosed and many others do not adhere to their treatment plans, meaning there are even greater expenditures related to the direct and indirect costs that come with complications and co-morbidities.1

Diabetes has a significant economic impact on employers and employees alike. Yet an employer survey conducted by MBGH showed that 79% of employers do not track the direct or indirect costs of diabetes care. Making a case for implementing a diabetes management program in the workplace starts with knowing what diabetes costs your company.

Click here to see how diabetes impacts the personal health care spending of employees.

Direct Costs

Expenses related to inpatient and primary care, medications and supplies continue to drive the increases in direct medical costs associated with diabetes. These costs can be measured using medical and pharmacy claims data. Click here for more information

According to an ADA study, the top direct medical costs resulting from treatment of people with diabetes include:

  • Hospital inpatient = 43%
  • Prescription medications to treat complications = 18%
  • Antidiabetic agents and supplies = 12%

More than 88% of people with diabetes suffer from comorbidities (other health conditions related to the disease), the top three being obesity, high blood pressure and hyperlipidemia. Because comorbidities often require multiple medications and other aspects that make a patient’s treatment regimen more complex, there is an increased risk of nonadherence. This typically leads to complications and increased direct medical costs.8

Indirect Costs

Indirect costs are often difficult to measure because few tools exist that deliver meaningful data to quantify them. Following are the drivers of indirect costs related to diabetes and the economic burden they place on employers and employees alike:3

  • Inability to work as a result of disease-related disability ($21.6 billion)
  • Reduced productivity while at work – presenteeism ($20.8 billion)
  • Lost productive capacity due to early mortality ($18.5 billion)
  • Increased workdays missed due to health condition – absenteeism ($5 billion)

For more information on indirect costs, review these links: