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

American Diabetes Association

Diabetes Care. 2003;26(3)

Abstract and Introduction

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.

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.

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Table 1. Projections of the U.S. population diagnosed with diabetes (in millions)
	2002	2010	2020	% Increase from 2002 to 2020
Total population	288	307	335	17
Diagnosed with diabetes	12.1	14.5	17.4	44
Overall diabetes prevalence rate	4.2%	4.7%	5.2%	24
Race/ethnicity
Hispanic	1.4	2.0	2.9	107
Non-Hispanic white	8.1	9.1	10.3	27
Non-Hispanic black	2.0	2.5	3.0	50
Non-Hispanic other	0.6	0.9	1.2	100
Sex
M	5.8	7.1	8.6	48
F	6.3	7.4	8.8	40
Age (years)
<45	2.1	2.0	2.1	0
45-64	5.2	7.0	7.7	48
≥65	4.8	5.5	7.5	56

Table 2. Source of health resource use and price estimates
Cost component	Source of use data	Source of price data	Unit price (2002 dollars)
Institutional care
Hospital day	1999 NIS	1998 MEPS	2,385
Nursing home day	1999 NNHS	Kiplinger^[5]	169
Outpatient care
Office-based physician encounter	1998-2000 NAMCS	1998 MEPS	160
Emergency department visit	1998-2000 NHAMCS	1998 MEPS	452
Ambulance service	1998-2000 NHAMCS	AAA	247*
Hospital outpatient and free-standing ambulatory surgical center visit	1998-2000 NHAMCS	1998 MEPS	561
Outpatient medication	1998-2000 NAMCS, 1998-2000 NHAMCS	1998 MEPS	47
Home health visit	1998, 2000 NHHCS, 1998-2000 NHIS	1998 MEPS	89
Hospice care day	1998, 2000 NHHCS	Hospice Association of America^[6]	107
Indirect costs
Lost workday	1998-2000 NHIS	BLS	168
Restricted activity day	1998-2000 NHIS	BLS	67
Premature mortality (lost lifetime earnings)	Social Security Administration^[7]	BLS	116,928
Permanent disability (lost annual earnings)	2002 Social Security Administration Data^[8]	BLS	42,462
Supplies
Insulin use (supplies include glucose monitoring supplies, insulin delivery supplies, and insulin) and average annual cost of use	1998-2000 NHIS, 2002 The Source Prescription Audit, LifeClinic^[9,10], Fertig et al.^[11], Frost and Sullivan^[12]	2002 Red Book^[13], 2002 The Source Prescription Audit, Scott-Levin, 2002 AllegroMedical et al.^[14], 2002 MiniMed^[15]	1,778
Use of oral agents and average annual cost of use	1998-2000 NHIS, Luna and Feinglos^[16], 2002 The Source Prescription Audit, CDC^[17], NIDDK^[18]	2002 Red Book^[13]	666

Table 1. Projections of the U.S. population diagnosed with diabetes (in millions)
	2002	2010	2020	% Increase from 2002 to 2020
Total population	288	307	335	17
Diagnosed with diabetes	12.1	14.5	17.4	44
Overall diabetes prevalence rate	4.2%	4.7%	5.2%	24
Race/ethnicity
Hispanic	1.4	2.0	2.9	107
Non-Hispanic white	8.1	9.1	10.3	27
Non-Hispanic black	2.0	2.5	3.0	50
Non-Hispanic other	0.6	0.9	1.2	100
Sex
M	5.8	7.1	8.6	48
F	6.3	7.4	8.8	40
Age (years)
<45	2.1	2.0	2.1	0
45-64	5.2	7.0	7.7	48
≥65	4.8	5.5	7.5	56

Table 3. Health care use attributable to diabetes in the U.S., by age and type of service, 2002 (in thousands)
Type of service	Age (years)			Total
Type of service	<45	45-64	≥65	Total
Institutional care
Hospital inpatient days	2,183	5,802	8,927	16,912
Nursing home days	15,141	32,805	34,406	82,352
Outpatient care
Office-based physician encounters	11,555	16,718	34,365	62,638
Emergency department encounters	334	971	3,478	4,782
Hospital outpatient and free-standing ambulatory surgical center encounters	46	2,399	3,467	5,912
Home health visits	1,493	5,899	36,820	44,212
Hospice care days	48	430	4,616	5,094

Table 4. U.S. health care use attributable to diabetes by medical condition (in thousands)
Service	Diabetes	Chronic complications							General medical conditions	Total
Service	Diabetes	Neurological	Peripheral vascular	Cardiovascular	Renal	Metabolic	Ophthalmic	Other	General medical conditions	Total
Institutional care
Inpatient days	856	460	313	4,084	410	16	5	89	10,680	16,912
Nursing home days	25,296	7,948	941	12,628	2,600	107	9	161	32,663	82,352
Outpatient care
Physician office visits	9,930	652	336	13,064	980	1,171	1,502	175	34,826	62,638
Emergency visits	309	65	31	690	166	4	19	41	3,456	4,782
Hospital outpatient visits	1,357	47	49	1,367	111	93	109	16	2,763	5,912
Home health visits	16,924	1,077	1,000	6,973	803	33	77	103	17,221	44,212
Hospice care days	121	39	9	698	52	1	0	0	4,175	5,094

Table 5. Share of total U.S. health care use attributable to diabetes by medical condition
Service	Diabetes	Chronic complications							General medical conditions	Total
Service	Diabetes	Neurological	Peripheral vascular	Cardiovascular	Renal	Metabolic	Ophthalmic	Other	General medical conditions	Total
Institutional care
Inpatient days	5	3	2	24	2	0	0	1	63	100
Nursing home days	31	10	1	15	3	0	0	0	40	100
Outpatient care
Physician office visits	16	1	1	21	2	2	2	0	56	100
Emergency visits	6	1	1	14	3	0	0	1	72	100
Hospital outpatient visits	23	1	1	23	2	2	2	0	47	100
Home health visits	38	2	2	16	2	0	0	0	39	100
Hospice care days	2	1	0	14	1	0	0	0	82	100

Table 6. Proportion of total U.S. health care use attributable to diabetes for various conditions
Service*	Diabetes	Chronic complications							General medical conditions	Total
Service*	Diabetes	Neurological	Peripheral vascular	Cardiovascular	Renal	Metabolic	Ophthalmic	Other	General medical conditions	Total
Institutional care
Inpatient days	100	7	8	19	10	13	8	3	8	9
Nursing home days	100	15	12	19	20	13	0	4	9	15
Outpatient care
Physician office visits	100	8	6	20	8	14	6	2	5	7
Emergency visits	100	7	7	20	7	13	17	1	4	4
Hospital outpatient visits	100	9	8	22	8	14	12	1	4	7
Home health visits	100	7	9	19	12	7	9	3	11	18
Hospice care days	100	5	9	19	10	11	0	0	13	14

Table 7. Health care expenditures attributable to diabetes in the U.S., by age and type of service, 2002 (in millions of dollars)
Type of service	Age (years)			Total
Type of service	<45	45-64	≥65	Total
Institutional care
Hospital inpatient days	5,207	13,838	21,293	40,337
Nursing home days	2,552	5,528	5,798	13,878
Outpatient care
Office-based physician encounters	1,851	2,678	5,505	10,033
Emergency department encounters	151	439	1,572	2,162
Hospital outpatient and free-standing ambulatory surgical center encounters	26	1,345	1,944	3,315
Home health visits	133	524	3,273	3,930
Hospice care days	5	46	492	543
Other expenditures
Ambulance services	28	40	77	146
Outpatient medication	756	1,991	2,769	5,516
Oral agents	533	2,318	2,157	5,009
Insulin and delivery supplies	1,355	2,891	2,745	6,991
Total	12,596	31,640	47,626	91,861

Table 8. Health care expenditures attributable to diabetes, by medical condition and type of service, 2002 (in millions of dollars)
Medical condition	Inpatient days	Office visits	Outpatient visits	Emergency visits	Nursing home days	Home health visits	Hospice care days	Other	Total
Diabetes	2,043	1,591	761	140	4,263	1,504	13	12,916	23,231
Neurological symptoms	1,096	104	26	29	1,339	96	4	52	2,748
Peripheral vascular disease	746	54	27	14	159	89	1	31	1,121
Cardiovascular disease	9,740	2,093	767	312	2,128	620	74	1,892	17,626
Renal complications	977	157	62	75	438	71	6	92	1,879
Endocrine/metabolic complications	38	188	52	2	18	3	0	126	426
Ophthalmic complications	11	241	61	9	2	7	0	92	422
Other complications	212	28	9	19	27	9	0	14	318
General medical conditions	25,473	5,578	1,549	1,562	5,504	1,531	445	2,447	44,091
Total	40,337	10,033	3,315	2,162	13,878	3,930	543	17,662	91,861

Table 9. Total health care expenditures by diabetes status, 2002 (in millions of dollars and % of U.S. total)
Cost component	Population with diabetes				Population without diabetes	U.S. total
	Attributable to diabetes		Incurred by people with diabetes
	Millions of dollars	% of U.S. total	Millions of dollars	% of U.S. total
Hospital inpatient	40,337	9	76,245	18	354,970 (millions of dollars)	431,216 (millions of dollars)
Nursing home	13,878	15	25,860	28	67,915	93,775
Physician's office	10,033	7	18,433	13	118,484	136,917
Hospital outpatient	3,315	7	5,911	12	42,330	48,240
Emergency	2,162	4	4,424	9	44,952	49,375
Outpatient medication	5,516	9	9,636	15	55,074	64,710
Home health	3,930	18	6,230	28	15,873	22,103
Hospice care	543	14	1,020	26	2,960	3,981
Ambulance services	146	5	281	10	2,433	2,714
Insulin and delivery supplies	6,991	100	6,991	100	NA	6,991
Oral agents	5,009	100	5,009	100	NA	5,009
Total health care costs	91,861	11	160,041	19	704,991	865,032

Table 10. Annual per capita health care expenditures by diabetes status, 2002
Cost component	With diabetes	Unadjusted		Adjusted*
Cost component	With diabetes	Without diabetes	Ratio with to without diabetes	Without diabetes	Ratio with to without diabetes
Hospital inpatient	$6,309	$1,289	4.9	$2,971	2.1
Nursing home	2,140	247	8.7	991	2.2
Physician's office	1,525	430	3.5	695	2.2
Hospital outpatient	489	154	3.2	215	2.3
Emergency	366	163	2.2	187	2.0
Home health	516	58	8.9	190	2.7
Hospice	84	11	7.9	39	2.1
Ambulance services	23	9	2.6	11	2.1
Outpatient medication	797	202	3.9	341	2.3
Insulin & delivery supplies	579	NA	NA	NA	NA
Oral agents	414	NA	NA	NA	NA
Total health care costs	$13,243	$2,560	5.2	$5,642	2.4

Table 11. Morbidity costs attributable to diabetes, 2002
Cause of permanent disability	Attributed disability cases	% of total attributed cases	Value of lost productivity (billions of dollars)
Diabetes	121,893	69	5.2
Cardiovascular disease	12,110	7	0.5
Renal disease	3,887	2	0.2
Other diagnoses	38,584	22	1.6
Total	176,475	100	7.5

Table 12. Mortality costs attributable to diabetes, 2002
Primary cause of death	Deaths attributed to diabetes (thousands)	% of total U.S. deaths	Total lost years (thousands)	Value of lost productivity (millions of dollars)
Diabetes	72	100	1,080	10,622
Renal disease	2	6	31	273
Cerebrovascular disease	4	12	54	305
Cardiovascular disease	108	19	1,357	10,358
Grand total	186	NA*	2,522

Table 13. Total cost of diabetes, 2002
Cost component	Total cost attributable to diabetes (millions of dollars)	Components' proportion of total cost (%)*
Health care expenditures	91,861	70
Institutional care	54,215	41
Hospital inpatient care	40,337	31
Nursing home care	13,878	11
Outpatient care	20,130	15
Physician office-based care	10,033	8
Emergency care	2,162	2
Ambulance services	146	0
Hospital outpatient care	3,315	3
Home healthcare	3,930	3
Hospice care	543	0
Outpatient medication and supplies	17,516	13
Outpatient medication	5,516	4
Insulin and delivery supplies	6,991	5
Oral agents	5,009	4
Indirect costs due to lost productivity	39,810	30
Lost work days	4,503	3
Restricted activity days	6,256	5
Mortality	21,558	16
Permanent disability	7,494	6
Total cost	131,672	100

Sidebar: Appendix

Chronic complications of diabetes	ICD-9 MEPS codes
Neurological symptoms
Myasthetic syndromes in diseases classified elsewhere (amyotrophy)	358.1
Other specified idiopathic peripheral neuropathy	356.8
Mononeuritis of upper and lower limbs	354, 355
Arthropathy associated w/neurological disorders (Charcot's arthropathy)	713.5
Peripheral autonomic neuropathy	337.1
Polyneuropathy in diabetes	357.2
Neuralgia, neuritis, and radiculitis, unspecified	729.2
Diabetes with neurological complications	250.6
Occlusion of cerebral arteries	434
Hemorrhagic stroke	430-432
Late effects of cerebrovascular disease	438
Occlusion of stenosis of pre-cerebral arteries	433
Other and ill-defined cerebrovascular disease	437
Acute, but ill-defined, cerebrovascular disease	436
Transient ischemic attack	435
Peripheral vascular disease
Atherosclerosis	440
Embolism and thrombosis, structure of artery	444, 447.1
Other peripheral vascular disease	443
Other disorders of circulatory system	459
Phlebitis and thrombophlebitis, portal vein thrombosis, and thrombolism and venous thrombolism	451, 452
Other venous embolism and thrombolism	453
Varicose veins of lower extremities	454
Gangrene and amputations	785.4, 885-887, 895-897
Chronic ulcer of skin	707
Cardiovascular disease
Aortic and other aneurysms	441, 442
Hypotension	458
Angina	413
Conduction disorders and cardiac dysrhythmias	426-427
Atherosclerotic cardiovascular disease	429.2
Cardiomegaly	429.3
Cardiomyopathy	425
Other acute and subacute forms of ischemic heart disease	411
Heart failure	428
Diabetes w/peripheral circulatory disorders	250.7
Myocardial degeneration	429.1
Myocardial infarction	410, 412
Other chronic ischemic heart disease	414
Hypertension	401-405
Renal Complications
Infections of kidney	590
Other disorders of bladder	596
Cystitis	595
Renal sclerosis, unspecified	587
Glomerulonephritis, nephrotic syndrome, nephritis, nephropathy	580-583
Proteinuria	791.0
Renal failure and its sequelae	584, 586, 588
Other disorders of kidney and ureter	593
Urinary tract infection	599.0
Diabetes and renal complications	250.4
Chronic renal failure (end-stage renal disease)	585
Endocrine/metabolic complications
Dwarfism-obesity syndrome	259.4
Glycogenosis and galactosemia	271.0, 271.1
Disorders of iron metabolism	275.0
Hypercholesterolemia	272.0
Hyperchylomicronemia	272.3
Hyperkalemia	276.7
Hypertriglyceridemia	272.1
Macroglobulinemia	273.3
Lancereaux's disease	261
Lipidoses	272.7
Other specified endocrine disorders	259.8
Other and unspecified hyperlipidemia	272.4
Mixed hyperlipidemia	272.2
Renal glycosuria	271.4
Ophthalmic complications
Other retinal disorders	362
Vascular disorders of the iris and ciliary body	364.0, 364.4
Disorders of the optic nerve and visual pathways	377
Diabetes with ophthalmic complications	250.5
Cataract	366
Glaucoma	365
Visual disturbance, low vision, blindness	368-369
Other complications
Bacteremia, bacterial infection, Coxsackie virus	079.2, 790.7
Candidiasis of skin and nails	112.3
Chronic osteomyelitis of the foot	730.17
Other and unspecified noninfectious gastroenteritis and colitis	558.9
Impotence of organic origin	607.84
Infective otitis externa	380.1
Degenerative skin disorders	709.3
Candidiasis of vulva and vagina	112.1
Cellulitis	681, 682
Diabetes with other specified manifestations	250.8
Diabetes with unspecified complication	250.9
Other bone involvement in disease classified elsewhere	731.8

ICD-9, International Classification of Diseases, Ninth Revision.

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

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