What Is the Real Cost of Diabetes to U.S. Healthcare System?

Updated on April 18, 2019
Michael Mannen profile image

I am Sports Writer and Harvard School of Public Health Alum.

Diabetes is a killer to the U.S. Economy

Diabetes represents an immense cost to the American Healthcare system. The primary patient advocacy group for diabetics, the American Diabetes Association, estimates that it costs the American Healthcare system over 300 billion dollars a year; representing approximately 15% of all healthcare spending in the United States(1,3).

A considerable fraction for any one disease! These costs have accelerated at roughly 5% a year over the last 5 years, even when taking into account inflation of other goods(1,3) However, these figures do not take into account the cost of prediabetes on our healthcare system. So, this begs the question, what is the real cost of diabetes? Let’s explore.

What is Diabetes?

Given how common diabetes has become, most people have a family member or friend that suffers from diabetes. Diabetes is a disease that characterized by elevated blood glucose levels. However, not all cases of diabetes are the same. Clinical cases of diabetes can be broadly classified as either Type 1 or Type 2. Type 1 diabetes is generally most prevalent in children and young adults and occurs when the pancreas stops producing insulin. Type 2 diabetes, however, involves your body not properly responding to insulin and having elevated blood glucose level as a result. Type 2 diabetes is more prevalent than Type 1 diabetes. And is generally more of a concern for older and overweight adults.

Prevalence of Diabetes

It is estimated that for every one person with diabetes, there are at least two that have prediabetes.4 Currently, among adults, roughly 1 in 3 Americans is either diabetic or prediabetic; that represents over 100 million Americans.4 Epidemiological and medical literature indicates that diabetes is highly associated with many other health problems such as obesity, heart diseases, and other chronic diseases. There is also significant ethnic variation in the prevalence of diabetes as well; minorities and people with lower socioeconomic status tend to have higher rates of type 2 diabetes compared to their counterparts.4 Moreover, your chance of developing type 2 diabetes significantly increases as you age as well.

Direct Healthcare Cost

According to the ADA, the average annual healthcare costs in 2017 per diabetic is $16,750 per year; approximately 2.3 times higher compared to their healthy counterparts!1 Most of these costs originate from hospital costs and procedures that diabetics must undergo because of the complications associated with their diabetes. Also approximately a third of the healthcare costs are due to diabetic medications and physician visits to manage symptoms(1,3). Moreover, not only is it expensive to manage diabetes, but it has been shown to give individuals a higher risk of heart disease, cancer, and virtually every other diseases. These complications of diabetes are equally costly to manage and are a burden on the American healthcare system. It is estimated by the ADSA that roughly a third of all healthcare costs due to diabetes are the result of its complications(1,3)! However, while morbid to discuss, diabetes treatments and management represent a vast market for American drug makers, hospitals, and providers. This is one ignored benefit of having so many diabetics in the United States; it has become a formidable industry!

Indirect Cost: Worker Productivity

A considerable fraction of the cost of diabetes on society is represented by how it impacts the productivity of workers; an opportunity cost to the labor force that has been hard for economist and healthcare providers to quantify(1,3). However, the ADA estimated that this loss in productivity costs the United States workforce $90 billion dollars in 2017(1,3). This loss in productivity includes, but is not limited to, workers having to retire early, missed work days, premature death, loss in life expectancy, or being less effective at their job. Moreover, it is estimated, that the days of work lost due to disability caused by diabetes and early death are responsible for over half of these costs associated with loss of worker productivity(1). The latter has not been as well studied or quantified over the years. However, diabetes is not a uniform disease, and there can be degrees of severity and some workers may be more affected by it than others. Causing some workers to be better able at managing and concealing their symptoms from their employers. Numerous studies have found that diabetics are more likely to have costly workplace limitations and accommodations; making them less valuable to employers and more expensive to retain than their healthier counterparts(2). This could make it difficult for some diabetics to gain employment. Moreover, diabetics are also less likely to work and participate in the labor force than their more healthy counterparts(2). In some cases, diabetes may be classified as a disability and patients may be able to receive Supplemental Security Income(SSI) to help make their income higher so that they can live(2). However, this only occurs if one’s diabetes has gotten to the point where it is not manageable, and it prevents patients from working for at least the next year. However, traditionally, this is rare.

The Cost of Prediabetes

Those with prediabetes can often require extensive medical treatment to prevent their condition from getting any worse. It has been estimated that for each incidence of undiagnosed diabetes it costs $4,030 and $510 for each prediabetes case(5). Prediabetes is a difficult condition to diagnosis and it is generally associated with those patients that have elevated glucose levels, but do not meet the criteria for the clinical definition of diabetes. In 2012, it was estimated by the CDC that nearly 100 million Americans could be classified as prediabetic and this was costing over $25 billion in healthcare costs annually(5). This does not include costs associated with loss worker productivity. However, identifying cases of prediabetes or undiagnosed diabetes, by definition, is very difficult. Therefore, the actual costs associated with prediabetes may be substantially larger than those projected.

Is Diabetes becoming more of a burden?

So, is diabetes becoming more of a burden? Kinda. Despite the financial burden that diabetes represents to our healthcare system, currently the number of new diabetic cases appears to relatively stable and constant.4 This allows companies that offer products and services to diabetics to make decisions about the future with more certainty than those working on other diseases. However, the same cannot be said for other comorbidities associated with Diabetes. America’s obesity epidemic appears to be getting worst. Epidemiological evidence indicates a strong link between obesity classified according to one’s BMI and elevated blood glucose. Meaning that as obesity becomes more of an issue in the United States, the incidences of type of 2 diabetes have a high likelihood of increasing as well.

Elasticity of diabetic services and healthcare products?

For those who have not had much economics, elasticity is a property that examines how one variable responds due to a change in another variable. If a product has inelastic demand, than changing the price of that product has little to no impact on how much of that product consumers will buy. Conversely, if a product has an elastic demand, than changing the price of that product has a greater impact on how much of it consumers will buy. Most preventive healthcare services and products have a really high elasticity of demand. Meaning that increasing the cost of preventive healthcare services and products, means patients will dramatically shy away from it. This is generally the case with all health services where the patient does not face a life or death situation. Why spend money on healthcare if it is not absolutely necessary to maintain your health? However, for patients with advanced cases of diabetes, diabetic supplies such as testing strips and insulin become necessary to live, and most research indicates that these products have an inelastic demand. This is also the case for surgeries that diabetics need because the complication for their diabetes has gotten too bad to treat with medication. As a result, most prediabetics made forgo getting treatment in the early stages, but are willing to pay almost any price when their diabetes has gotten out of hand.This creates a serious roadblock in the treatment of diabetes and is potentially the reason diabetes is such a burden to the United States healthcare system.

So, what are the implications? Diabetes is a not only a killer to the U.S. Economy, but the impact that prediabetics and worker production makes it an even bigger killer.

References:

1.The Cost of Diabetes. (n.d.). Retrieved April 19, 2019, from http://www.diabetes.org/advocacy/news-events/cost-of-diabetes.html

2.Dall, T. M., Yang, W., Halder, P., Pang, B., Massoudi, M., Wintfeld, N., . . . Hogan, P. F. (2014, December 01). The Economic Burden of Elevated Blood Glucose Levels in 2012: Diagnosed and Undiagnosed Diabetes, Gestational Diabetes Mellitus, and Prediabetes. Retrieved April 19, 2019, from http://care.diabetesjournals.org/content/37/12/3172

3.Economic Costs of Diabetes in the U.S. in 2017. (2018). Diabetes Care, (5).

4.Is Diabetes a Disability? (n.d.). Retrieved April 19, 2019, from http://diabetes.org/living-with-diabetes/know-your-rights/discrimination/is-diabetes-a-disability.html

5.New CDC report: More than 100 million Americans have diabetes or prediabetes | CDC Online Newsroom | CDC. (n.d.). Retrieved April 19, 2019, from https://www.cdc.gov/media/releases/2017/p0718-diabetes-report.html

6.New CDC report: More than 100 million Americans have diabetes or prediabetes | CDC Online Newsroom | CDC. (n.d.). Retrieved April 19, 2019, from https://www.cdc.gov/media/releases/2017/p0718-diabetes-report.html



This content is accurate and true to the best of the author’s knowledge and does not substitute for diagnosis, prognosis, treatment, prescription, and/or dietary advice from a licensed health professional. Drugs, supplements, and natural remedies may have dangerous side effects. If pregnant or nursing, consult with a qualified provider on an individual basis. Seek immediate help if you are experiencing a medical emergency.

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