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Economic Costs of Diabetes in the U.S. in 2002

ABSTRACT

OBJECTIVE—Diabetes is the fifth leading cause of death by disease in the U.S. Diabetes also contributes to higher rates of morbidity—people with diabetes are at higher risk for heart disease, blindness, kidney failure, extremity amputations, and other chronic conditions. The objectives of this study were 1) to estimate the direct medical and indirect productivity-related costs attributable to diabetes and 2) to calculate and compare the total and per capita medical expenditures for people with and without diabetes.

RESEARCH DESIGN AND METHODS—Medical expenditures were estimated for the U.S. population with and without diabetes in 2002 by sex, age, race/ethnicity, type of medical condition, and health care setting. Health care use and total health care expenditures attributable to diabetes were estimated using etiological fractions, calculated based on national health care survey data. The value of lost productivity attributable to diabetes was also estimated based on estimates of lost workdays, restricted activity days, prevalence of permanent disability, and mortality attributable to diabetes.

RESULTS—Direct medical and indirect expenditures attributable to diabetes in 2002 were estimated at $132 billion. Direct medical expenditures alone totaled $91.8 billion and comprised $23.2 billion for diabetes care, $24.6 billion for chronic complications attributable to diabetes, and $44.1 billion for excess prevalence of general medical conditions. Inpatient days (43.9%), nursing home care (15.1%), and office visits (10.9%) constituted the major expenditure groups by service settings. In addition, 51.8% of direct medical expenditures were incurred by people >65 years old. Attributable indirect expenditures resulting from lost workdays, restricted activity days, mortality, and permanent disability due to diabetes totaled $39.8 billion. U.S. health expenditures for the health care components included in the study totaled $865 billion, of which $160 billion was incurred by people with diabetes. Per capita medical expenditures totaled $13,243 for people with diabetes and $2,560 for people without diabetes. When adjusting for differences in age, sex, and race/ethnicity between the population with and without diabetes, people with diabetes had medical expenditures that were 2.4 times higher than expenditures that would be incurred by the same group in the absence of diabetes.

CONCLUSIONS—The estimated $132 billion cost likely underestimates the true burden of diabetes because it omits intangibles, such as pain and suffering, care provided by nonpaid caregivers, and several areas of health care spending where people with diabetes probably use services at higher rates than people without diabetes (e.g., dental care, optometry care, and the use of licensed dietitians). In addition, the cost estimate excludes undiagnosed cases of diabetes. Health care spending in 2002 for people with diabetes is more than double what spending would be without diabetes. Diabetes imposes a substantial cost burden to society and, in particular, to those individuals with diabetes and their families. Eliminating or reducing the health problems caused by diabetes through factors such as better access to preventive care, more widespread diagnosis, more intensive disease management, and the advent of new medical technologies could significantly improve the quality of life for people with diabetes and their families while at the same time potentially reducing national expenditures for health care services and increasing productivity in the U.S. economy.

Abbreviations: ADA, American Diabetes Association • BLS, Bureau of Labor Statistics • CMMS, Centers for Medicare and Medicaid Services • GHPS, Group Health of Puget Sound • MEPS, Medical Expenditure Panel Survey • NHIS, National Health Interview Survey • PVFE, present value of future earnings • SSDI, Social Security Disability Insurance

Diabetes cost the U.S. an estimated $132 billion in 2002 in medical expenditures and lost productivity. Across the components of the health care system included in this study, per capita direct medical expenditures for the 12.1 million people diagnosed with diabetes in the U.S. are more than double the expenditures of otherwise similar people without diabetes. A total of $92 billion in direct medical expenditures are attributable to diabetes. Diabetes is associated with higher rates of lost work time, disability, and premature mortality. The resulting economic loss to the U.S. economy in 2002 alone is estimated to be $40 billion. This cost estimate documents the extraordinary national economic burden of diabetes. Even so, such estimates do not account for the losses attributable to pain and suffering incurred by people with diabetes, as well as to families and friends of those with diabetes.

The prevalence of diabetes increases with age and is higher among certain racial and ethnic minority populations. The growth, aging, and increasing racial and ethnic diversity of the U.S. population portends a substantial increase in the size of the population with diabetes. If diabetes prevalence rates remained constant over time, controlling for age, sex, race, and ethnicity, then based on Census Bureau population projections (1), the number of people diagnosed with diabetes could increase to 14.5 million by 2010 and to 17.4 million by 2020. The projected increase in the number of people with diabetes suggests that the annual cost in 2002 dollars of diabetes could rise to an estimated $156 billion by 2010 and to $192 billion by 2020. The actual cost in future years could be higher if the cost of health care outpaces the overall cost of living, or if the growing problem of obesity increases the prevalence of type 2 diabetes.

This national cost estimate represents an increase from estimates reported in earlier studies, reflecting the growing prevalence of diabetes in the U.S. and the increasing cost of health care services. Comparison of national cost estimates across studies is complicated by differences in the cost components included in each study, the continuing growth and aging of the U.S. population, and changes over time in the cost of health care services. The previous American Diabetes Association (ADA) study on the cost of diabetes estimated the national cost of diabetes in 1997 to be $98 billion (2).

Documenting the national economic impact of diabetes can inform priority setting in health care research and delivery, including prevention, diagnosis, and treatment of diabetes.

Unless specifically noted, this study uses prevalence-based cost-of-illness methods similar to the approach used by ADA (2,3). The following is an overview of the research design and methods used for this study, a discussion of important findings, and a summary of the implications of these findings, limitations of the study, and suggestions for future research.

RESEARCH DESIGN AND METHODS

The approach used to estimate the cost of diabetes follows, to the extent possible, the approach used in previous studies of the cost of diabetes and, in particular, ADA’s previous cost estimate (2). This approach has found acceptance in the general cost-of-disease literature. Deviations from the approach used previously by ADA (2) are noted and occur in some instances when the exact approach used in the earlier study could not be determined or when new data sources and analytical tools enable improvements to past approaches. Below is a summary of the approach used to estimate 1) the size of the population with diabetes, 2) health care use and total health care expenditures attributable to diabetes, and 3) the value of lost productivity attributable to diabetes.

Estimating the size of the population with diabetes
This national cost estimate is based on an estimate of 12.1 million people in the U.S. in 2002 who have been diagnosed with diabetes. This estimate of the magnitude of the diabetic population represents an increase of 1 million (9%) from year 2000 estimates and an increase of 1.8 million (17%) from year 1997 estimates. Based on results from the 2000 Census, it appears that during the period of 1990–2000, the U.S. population grew faster than projected by the Census Bureau. (The actual U.S. population in 2000, based on the 2000 Census, exceeded the Census Bureau’s pre-2000 projections of the U.S. population in 2000 by 6.8 million individuals [or 2.4% of the total population]. One implication is that pre-2000 estimates of the number of people with diabetes in the U.S. were biased downward because the sample weights used in surveys such as the National Health Interview Survey (NHIS) were based on Census Bureau population estimates.) It is based on self-reported prevalence of diabetes only; therefore, it does not account for the considerable number of people with diabetes who are unaware that they have the disease or do not report it. Indeed, the ADA estimates that as many as one-third of people with diabetes are unaware that they have the disease. Further, this estimate excludes women with gestational diabetes.

This cost estimate is based on prevalence rates derived from the combined 1998, 1999, and 2000 files of the NHIS. Combining 3 years’ worth of NHIS files created larger samples with which to estimate separate prevalence rates for each of 12 age-groups by sex and by four race/ethnicity designations. (The 12 age categories are 0–17, 18–24, 25–29, 30–34, 35–39, 40–44, 45–49, 50–54, 55–59, 60–64, 65–69, and 70 years. The four race/ethnicity categories are Hispanic, non-Hispanic white, non-Hispanic black, and non-Hispanic other.)

The NHIS collects data on 43,000 households of more than 106,000 people annually. The combined files for 1998–2000 create a sample of more than 320,000 people. People with diabetes are identified using the survey question that asks whether the survey participant has been told by a doctor that he or she has diabetes (other than gestational diabetes). Responses to the question are coded as "yes," "no," "borderline," and "no response." People responding "yes" are coded as having diabetes. People responding "borderline" are not counted as having diabetes in this analysis.

As shown in Figs. 1 and 2, diabetes prevalence rates increase with age. Prevalence rates vary substantially by race and ethnicity. They are higher for Hispanics and non-Hispanic blacks than for non-Hispanic whites. Furthermore, the rates for other populations (i.e., Asian Americans, American Indians, Pacific Islanders, etc.) are similar to those of non-Hispanic whites among females but are higher than the rates for non-Hispanic whites among males.

View larger version (35K): [in this window] [in a new window]   Figure 1— Proportion of female population with confirmed diabetes in 2002.

View larger version (37K): [in this window] [in a new window]   Figure 2— Proportion of male population with confirmed diabetes in 2002.

If diabetes prevalence rates within a demographic group remained constant over time, then, based on Census Bureau population projections (1), the size of the population with diabetes will grow to 14.5 million by 2010 and to 17.4 million by 2020 (Table 1). Whereas the U.S. population is projected to increase by 17% between 2002 and 2020, the size of the population diagnosed with diabetes is projected to increase by 44% due, in large part, to the increase in the size of the elderly population and the increasing racial and ethnic diversity of the U.S. population. Changing demographic characteristics will contribute to an increase in the overall prevalence rate for diagnosed cases of diabetes from 4.2% in 2002 to a projected 5.2% in 2020.

Although there is no projected increase in the total number of people under age 45 years diagnosed with diabetes between 2002 and 2020, the projected increases for populations aged 45–64 and 65 years are 48 and 56%, respectively.

Health resource use attributable to diabetes
In addition to receiving health care services for medical conditions directly related to diabetes, people with diabetes are at greater risk for neurological disease, peripheral vascular disease, cardiovascular disease, renal disease, endocrine/metabolic complications, ophthalmic disease, and other chronic complications compared with individuals without diabetes. A portion of health care use associated with these medical conditions is attributable to diabetes.

The general principle for estimating the cost of diabetes in this analysis is straightforward. Health care use attributable to diabetes is determined by a comparison of the health care use patterns of individuals with and without diabetes, controlling for differences between the two populations in demographic characteristics that are potentially correlated with the use of health care services (e.g., age, sex, and race/ethnicity).

Three limitations of the source data, however, increase the complexity of the analysis design and calculations. These limitations are 1) absence of a single data source for all estimates, 2) small sample sizes for some items of interest, and 3) underreporting of diabetes as a comorbidity. The implications of these limitations and how we have addressed these limitations are summarized below.

• No single source of data. Because no single data source representative of the U.S. population contains all of the information necessary to estimate the health care cost of diabetes, it is necessary to draw upon multiple data sources. Among some of these sources are differences in definitions for identifying people with diabetes and differences in levels of detail to categorize types of patient visits. One source of complete data required to estimate direct medical expenditures attributable to diabetes is claims from Group Health of Puget Sound (GHPS). This data source contains a diabetic flag in a disease registry, but the GHPS sample might not be representative of health care use patterns and costs for the entire U.S. population. The Medical Expenditure Panel Survey (MEPS) is closest to a single, nationally representative source of data in that it 1) identifies people with diabetes-related conditions, 2) measures health care use, and 3) provides cost information. However, MEPS is limited by the small sample size.
  
• Small sample sizes for some items of interests. Disaggregating the U.S. population by age, sex, race, and ethnicity requires relatively large sample sizes to obtain reliable estimates of differences in use patterns by diabetes status when analyzing specific medical conditions associated with diabetes. The number of identified people with diabetes who participated in the most recent MEPS is insufficient to obtain reliable estimates of health care use for some chronic complications associated with diabetes and in some health care settings. The use of alternative data sources, such as the National Ambulatory Medical Care Survey, increases sample size but is hindered by the third major limitation—underreporting of diabetes as a comorbidity.
  
• Underreporting of diabetes as a comorbidity. The literature reports that there is significant underreporting of diabetes as a comorbidity in health care databases. Unless the attending physician lists diabetes as a comorbidity on the patient’s medical record, the health care services provided to that patient are not linked to diabetes. Sources such as GHPS and MEPS allow one to identify whether a person has been diagnosed with diabetes but, as discussed above, their representativeness is often questioned (in the case of GHPS) or they have insufficient sample size.
  

These data limitations are addressed as follows. First, the study uses an eclectic approach that combines findings from empirical analysis of multiple data sources with findings reported in the literature. Second, for several national surveys completed annually, multiple years’ worth of data are pooled to increase sample size. Third, similar to previous studies, this study uses an attributable risk methodology to estimate use of health care services that can be attributed to diabetes.

The attributable risk methodology estimates the odds of having a particular medical condition by diabetes status, then combines these odds with estimates of the proportion of the population with diabetes to calculate an etiological fraction. The etiological fraction represents an estimate of the proportion of health care services for a particular medical condition that is attributable to diabetes. The etiological fraction is calculated based on the following:

where E_i is the fraction of health care use for medical condition "i" that is attributable to diabetes, P represents the diabetes prevalence rate, and R_i is the relative risk of disease i (i.e., the odds ratio) for people with diabetes compared with people without diabetes.

Combining odds ratios estimated using the MEPS with diabetes prevalence rates estimated using the NHIS creates separate etiological fractions for the medical conditions listed in Fig. 3 for each demographic group modeled. This figure combines etiological fractions across the 12 age-groups by race/ethnicity and sex to present etiological fractions for the population aged <45, 45–64, and 65 years. The etiological fractions vary substantially by age to reflect the changing prevalence of diabetes and differences in the prevalence of specific medical conditions by age. For example, for the populations aged <45, 45–64, and 65 years, the proportions of all health care use associated with neurological disease that is attributable to diabetes are 6, 10, and 5%, respectively. The medical condition with the highest etiological fractions is cardiovascular disease, where the proportions of all health care visits attributable to diabetes for individuals aged <45, 45–64, and 65 years are 16, 20, and 17%, respectively.

View larger version (30K): [in this window] [in a new window]   Figure 3— Etiological fractions, adjusted for race/ethnicity, sex, and finer age-groupings. CVD, cardiovascular disease; GMC, general medical conditions; PVD, peripheral vascular disease; OCC, other chronic complications.

Table 2 summarizes the data sources used to analyze each component of the cost analysis and summarizes the unit cost estimates. Sources of health care use data include the 1998–2000 files of the National Ambulatory Medical Care Survey, the 1998–2000 files of the National Hospital Ambulatory Medical Care Survey, the 1999 National Inpatient Sample, the 1999 National Nursing Home Survey, and the 1998 and 2000 files of the National Home and Hospice Care Survey.

Health care use rates for each of the nine conditions in each health delivery setting are estimated by patient age, sex, and race/ethnicity. Combining these use rates with etiological fractions and estimates of population size for each demographic group produces national estimates of health care use attributable to diabetes for each medical condition.

The 1998 MEPS is the primary source for most estimates of the per-unit price of health care services. Price estimates are based on actual payment for services, not charges. Price estimates from other sources are used when such information is readily available for more recent years or when price estimates from the MEPS appear unreliable (e.g., because of small sample sizes in the MEPS). All price estimates for health care services are adjusted to 2002 dollars using the medical component of the consumer price index. The unit prices represent averages across all patients irrespective of diabetes status or reason for visit (neonatal inpatient stays were omitted from the calculation of average cost per day). To the extent that the unit price is higher when diabetes is a comorbidity, or that inpatient days and outpatient visits tend to be more expensive for the medical complications associated with diabetes, the average unit cost might underrepresent the true unit cost for services attributable to diabetes.

Estimates of the average annual cost of supplies for people using insulin and oral agents were calculated using cost data from The Source Prescription Audit, the 2002 Red Book (13), pharmaceutical companies, and suppliers of devices used by people taking insulin. Based on prevalence rates computed using the combined 1998–2000 files of NHIS and estimates of the population in 2002, the estimated number of people using oral agents for diabetes and the estimated number of people using insulin are 7.5 and 3.9 million, respectively. The percentage of people using insulin and oral agents varies substantially by age, reflecting the increasing proportion of cases involving type 2 diabetes among the population with diabetes in older age brackets. Not all people with diabetes use either insulin or oral agents, especially among the younger age brackets.

Productivity foregone
People with diabetes are at greater risk of temporary incapacity (defined as lost workdays and bed days), permanent disability, and premature mortality. The pecuniary value of lost productivity is calculated based on the average earnings of the person whose productivity is foregone. Bureau of Labor Statistics (BLS) estimates of year 2001 annual earnings by age and sex for the civilian noninstitutional population are used to estimate the average cost per day of missing work, the average cost per year of permanent disability, and the loss of expected lifetime earnings resulting from premature mortality (19,20). Earnings estimates for 2001 are inflated to 2002 dollars using the overall consumer price index.

Lost workdays and bed days
The economic impact of temporary incapacity due to diabetes can be measured by both workdays lost and number of bed days, because both capture physical limitation due to diabetes that results in lost productivity. These data are obtained from the NHIS, in which respondents report workdays lost and bed days during the previous year due to illness. Lost workdays are defined as days in which a person misses work at a job or business because of diabetes or diabetes-related injury (excluding maternity leave). Bed days are defined as days in which a person is kept in bed more than half of the day because of diabetes or diabetes-related injury (including days while an overnight patient at a hospital). Lost workdays are subtracted from bed days to prevent overcounting if a person has both a lost workday and a bed day.

An estimate of workdays lost due to diabetes is found by comparing average days lost by diabetes status for each age-group and by sex. Controlling for age, men with diabetes have 3.1 more lost workdays and 7.9 more bed days per year, on average, than men without diabetes. Women with diabetes had 0.6 more lost workdays and 8.1 more bed days, on average, than women without diabetes. However, these estimates likely underestimate lost workdays to the extent that men and women with diabetes are less likely to be in the labor force than men and women without diabetes.

The pecuniary value of a workday is defined as average earnings for the person incurring the lost workday. Average earnings differ by age-group and sex, but the average earnings for people with diabetes who are between the ages of 18 and 64 is estimated at $168 per day. Following the approach used by Yassin et al. (21), the cost per bed day is defined as 40% of the cost of a lost workday.

Disability
People with diabetes are at greater risk for amputations, loss of vision, and other physical problems that can limit their earning potential or preclude them from gainful employment. Ideally, estimating lost earnings would entail comparing the average earnings of all people with diabetes to the average earnings of people without diabetes, controlling for differences in demographic characteristics and other factors that affect earning potential but that are unrelated to diabetes. A comparison of gross average earnings would capture both differences in labor force participation patterns and the possibility that an individual with diabetes will be in a lower-paying job. Unfortunately, there are no recent data that provide reliable information with which to estimate average earnings by diabetes status while controlling for demographic and other factors affecting earning potential.

Consequently, following the approach previously used by the ADA (2), data from the Social Security Administration are used to estimate the prevalence of total number of permanently disabled workers attributable to diabetes. The Social Security Disability Insurance (SSDI) program provides benefits to disabled workers and their spouses or children (whether or not they are disabled), retired workers and their dependent family members, and survivors of deceased workers. Individuals aged 18–64 years who receive SSDI benefits are included in the estimate of lost productivity attributed to diabetes-related disability. The Social Security Administration Office of Research, Evaluation, and Statistics compiles information on the total number of people with disabilities by specified condition. Therefore, using information on the number of disabled workers as a percentage of the total number of beneficiaries from Table 1 in the Annual Statistical Report on the Social Security Disability Insurance Program, 2000, we adjusted the Social Security Administration data to reflect the number of disabled workers by specified condition.

As of January 2002, there were an estimated 122,000 people aged 18–64 years receiving SSDI benefits where diabetes is listed as the primary basis of disability and another 109,000 people aged 18–64 years receiving SSDI benefits where diabetes is listed as the secondary basis of disability. This study attributes to diabetes 100% of the cases where diabetes is the primary basis of disability and 50% of the cases where diabetes is the secondary basis of disability. The number of cases where diabetes is a contributing factor to the disability, but where diabetes is not listed as the primary or secondary diagnosis, was unavailable. Also, the number of unemployed people with diabetes who are not receiving SSDI but who would be employed in the absence of diabetes is unknown. An estimated 176,475 person-years of permanent disability in 2002 are attributable to diabetes. Each case of permanent disability results in an average lost earnings of $42,462 per year. The national cost estimate excludes the cost to family and friends caring for a person with permanent disabilities attributable to diabetes.

Mortality
Data from the 1998 Multiple Cause of Death File (22) were used to determine the total number of deaths attributable to diabetes. The file reports causes of death, along with economic, geographic, and demographic information for deaths of all U.S. citizens occurring within the U.S.

Mortality-related productivity costs are the estimated value of lost future earnings from paid market and unpaid household labor resulting from premature death due to diabetes or diabetes-related diseases. The estimated loss in annual earnings is based on estimates of the proportion of the population in the labor force, estimates of annual mean earnings from the BLS, and estimates of the mean value of housekeeping services. The estimated value of lost housekeeping services for individuals not in the labor force is 40% of average earnings for people of similar age and sex who are in the work force and 20% of annual earnings for individuals in the labor force. Estimates of the present value of lifetime future earnings are based on human capital methodology, which assumes that earnings reflect the contribution workers make to the value of goods and services and that the present value of expected future earnings is an estimate of the value of human capital (23). The mortality-related productivity loss estimate incorporates both the number and timing of premature deaths attributable to diabetes.

Using 2001 earnings estimates from the Bureau of Labor Statistics, we updated the present value of future earnings (PVFE) estimates from Haddix et al. (24). The PVFE for 2002, including unpaid household work, was estimated assuming a 4% real discount rate. The average PVFE estimate for all diabetes-attributed mortality cases is $116,928, although the actual cost estimate differs by age and sex.

RESULTS

Health resource use attributable to diabetes
From estimates of per capita health care use and the size of the population, by demographic group, this study estimates total health care use for each demographic group. Applying the etiological fractions for the corresponding demographic groups results in estimates of health resource use attributable to diabetes.

Table 3 shows estimated health care use by type of service aggregated into three broad age-groups. The attributable health care use due to diabetes is greatest for the population aged 65 years, despite this population having slightly fewer people with diabetes than the population aged 45–64 years. For instance, office-based physician encounters attributable to diabetes for people over age 65 years is more than double the office-based physician encounters for people between 45 and 64 years. Use of emergency department, home health, and hospice care services is also substantially higher for the population over age 65 years compared with the population between age 45 and 64 years and the population under age 45 years.

• Most of the health care use attributable to diabetes is for the treatment of general medical conditions, i.e., visits or inpatient days where the primary diagnosis is neither diabetes nor one of the seven chronic complications analyzed. For example, 63% of hospital inpatient days attributable to diabetes fall under the category of general medical conditions.
  
• Of the seven chronic complications analyzed, cardiovascular disease accounts for the largest proportion of health care use attributable to diabetes. For example, in 2002, an estimated 4 million hospital inpatient days were attributable to diabetes where the primary diagnosis is related to cardiovascular disease. This constitutes 24% of total hospital days attributable to diabetes and 19% of total U.S. inpatient days when the primary diagnosis was related to cardiovascular disease.
  
• Diabetes accounts for a sizable increase in the use of health care services. An estimated 18% of home health visits in the U.S. are attributable to diabetes. Approximately 15% of nursing home services and 14% of hospice care services in the U.S. are attributable to diabetes.
  

Of the health care components analyzed, more than $1 in $10 spent on health care services in the U.S. is attributable to diabetes. Expenditures attributable to diabetes are greatest for hospital inpatient stays ($40.3 billion), followed by nursing home care ($13.9 billion) and visits to physician offices ($10 billion). The cost of oral agents to lower blood glucose, insulin, and insulin-related supplies totaled approximately $12 billion. Diabetes is responsible for a substantial proportion of total U.S. expenditures for certain health care services, e.g., 18% of home health expenditures, 15% of nursing home expenditures, and 14% of hospice care expenditures.

The estimated cost to provide health care services to people with diabetes exceeded $160 billion in 2002 (for those components of the health care system included in this study). This includes costs attributable to diabetes as well as non-diabetes-related costs. Although people with diagnosed diabetes comprise only slightly more than 4% of the U.S. population, of the components of the health care system included in this study, almost $1 of every $5 spent on health care in the U.S. is for a person with diabetes.

Because the prevalence of type 2 diabetes increases with age, the population with diabetes tends to be older compared with the population without diabetes. Consequently, people with diabetes incur a substantial proportion of long-term care services. For example, more than $1 in $4 spent for nursing home, home health, and hospice care is spent to provide services to someone with diabetes.

Dividing health care expenditures by the size of the population with and without diabetes creates estimates of per capita expenditures (Table 10). On average, people with diabetes incurred approximately $13,243 in health care expenditures in 2002 across the health care components included in this study. People without diabetes incurred approximately $2,560 in expenditures, for a ratio of 5 to 1. This comparison is slightly higher than ratios estimated by ADA (2) and Rubin et al. (27), who found a fourfold difference in average annual health care expenditures for people with diabetes compared with others. However, this ratio somewhat overstates the impact of diabetes on per capita costs because the demographic composition of the population with diabetes differs substantially from the demographic composition of the population without diabetes. The population with diabetes tends to be older, on average, than the population without diabetes.

Indirect costs attributable to diabetes
At an annual cost of $7.5 billion, more than 176,000 cases of permanent disability in 2002 are attributable to diabetes (Table 11). This cost estimate represents a sizeable decrease from the cost of disability in the 1998 report (2), which used the present value of lost lifetime earnings to estimate the cost of disability. We use average annual lost earnings, estimated at $42,462 per case, to represent the productivity loss associated with the disability. Disability cases where diabetes is listed as the primary cause accounts for more than two-thirds of total cases attributed to diabetes. Cases where cardiovascular disease is listed as the primary cause of disability accounts for 7% of all cases attributed to diabetes.

In 2002, an estimated 186,000 deaths were attributable to diabetes (Table 12). An estimated 19% of all deaths for which cardiovascular disease is listed as the primary cause of death are attributed to diabetes, and this accounts for 108,000 (58%) of all deaths attributable to diabetes.

National cost of diabetes
Combining estimates of health care expenditures and productivity losses attributable to diabetes yields an estimate of the national cost of diabetes (Table 13). In 2002, the estimated cost of diabetes was approximately $132 billion, of which approximately $92 billion (70%) was additional health care expenditures and $40 billion (30%) was lost productivity due to disability and early mortality. Institutional care (i.e., hospital inpatient care and nursing home care) was the largest component of health care costs and comprised 41% of the national cost of diabetes. Outpatient care, at $20 billion in 2002, comprised 15% of the national cost of diabetes. At $17.5 billion, the cost of outpatient medication and supplies comprised 13% of the national cost of diabetes.

View larger version (29K): [in this window] [in a new window]   Figure 4— Projected impact of changing demographic characteristics on the national cost of diabetes: 2002–2020 (in 2002 billions of dollars).

Health care spending in 2002 for people with diabetes is more than double what spending would be without diabetes. This costs the U.S. economy an estimated $92 billion in higher health care expenditures. Lost productivity attributed to diabetes resulting from lost workdays, lost home services, permanent disability, and premature mortality is estimated at $40 billion. Compared to people without diabetes, people with diabetes and their families bear a disproportionate share of health care expenditures.

This cost estimate is conservative and likely understates the true burden of diabetes for the following reasons:

• This estimate omits the cost of intangibles such as pain and suffering, the cost of care provided by informal caregivers, and administrative costs of insurers.
  
• The cost components included in this analysis account for only 58% of the estimated $1.5 trillion in U.S. health care expenditures in 2002. For example, over-the-counter medications and sundries, which Martin et al. (26) estimate at $122 billion in 1998, are omitted from the cost estimate. Whereas the areas of health care expenditures analyzed are those where health care use patterns have been shown to differ by diabetes status, there are several areas omitted from the analysis where people with diabetes probably use services at higher rates than people without diabetes, e.g., dental care, optometry care, and the use of licensed dietitians.
  
• The average price per health service used could differ by diabetes status. If health care conditions classified as "general medical conditions" (e.g., pneumonia) are more severe for people with diabetes than without diabetes, then the cost estimate would be too low. The study controls for differences in health care use attributable to diabetes, e.g., the number of hospital inpatient days, but does not control for differences in mix of health care professionals seen (e.g., if people with diabetes are more likely to see a specialist instead of a primary care physician).
  
• In this study, people with undiagnosed diabetes are categorized with the nondiabetic population. If per capita use of health care services is greater for people with undiagnosed diabetes than for people without diabetes, the health care costs attributable to diabetes will be underestimated.
  

Future research might investigate the cost of diabetes in these areas omitted from the present analysis.

The estimated national cost of diabetes was calculated using prevalence-based cost-of-illness methods with data from 1998 through 2002. For some components of the cost estimate (e.g., the cost of supplies), multiple data sources were analyzed and the results were compared to ensure robust results. One change from the approach used in ADA’s 1998 study was to combine multiple years of national health use databases to increase sample size and allow for finer disaggregation of the U.S. population—both of which would improve the accuracy of the findings, because the prevalence of diabetes and the use of health care services varies substantially by age-group, sex, and race/ethnicity. Greater disaggregation also allows for more accurate projections of the national cost of diabetes in future years as the U.S. population grows, ages, and becomes more racially and ethnically diverse. However, if lifestyle trends in the U.S. (such as the growing problem of obesity) increase diabetes prevalence rates, future costs could grow in excess of those extrapolated based on current prevalence rates.

Although this study includes the same cost components of ADA’s 1998 study (2), the change in estimated diabetes-attributed costs between 1997 and 2002 for some cost components reflects a refinement in the cost estimates as opposed to an actual change in true costs. As discussed previously, the 1998 study estimated disability-related costs at $32.5 billion in 1997, compared with the current study, which estimates disability-related costs at $7.5 billion. Much of the decrease in attributed costs is the result of using foregone expected annual expenditures instead of foregone expected lifetime earnings to estimate the pecuniary cost of lost productivity, which may have been an inadvertent overstatement in the previous report. This large decrease in attributed costs is offset by substantially higher cost estimates for certain health care components such as nursing home care, home health care, and physician office-based care.

One factor contributing to the large increase in attributed cost for nursing home care is the higher estimated cost per day in nursing homes ($169 per day used in this study vs. $79 per day [$97 per day in 2002 dollars] used in the 1998 study). This study estimates a much higher cost of home health care services, with an estimated 18% of total U.S. home health care services costs attributed to diabetes compared with an estimated 0.2% of the total U.S. cost of home health care services attributed to diabetes in the 1998 study. Martin et al. (26) estimated national expenditures of approximately $30 billion for home health care in 1997, compared with the estimate of $19 billion in the 1998 report (2).

Eliminating or reducing the health problems caused by diabetes through factors such as better access to preventive care, more widespread diagnosis, more intensive disease management, and the advent of new medical technologies could significantly improve the quality of life for people with diabetes and their families, while at the same time potentially reducing national expenditures for health care services and increasing productivity in the U.S. economy.

In conclusion, the cost of diabetes, both direct medical expenditures and the costs of foregone productivity, is estimated to have been $132 billion in 2002. This represents a substantial cost burden to society and, in particular, to those in-dividuals with diabetes and their families. Nevertheless, this estimate is conservative and probably underestimates the true cost of the disease.

Support for this study was provided by ADA, the National Institute of Diabetes and Digestive and Kidney Diseases, and the ADA Industry Advisory Council.

Footnotes

This report was prepared by Paul Hogan, Tim Dall, and Plamen Nikolov of the Lewin Group, Inc., Falls Church, Virginia.

Address correspondence and reprint requests to Matt Petersen, American Diabetes Association, 1701 N. Beauregard St., Alexandria, VA 22311. E-mail: mpetersen{at}diabetes.org.

A table elsewhere in this issue shows conventional and Système International (SI) units and conversion factors for many substances.

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