PRICE GOUGING

An aging baby boom population coupled with increasing human longevity has combined to dramatically increase incidence of chronic disease, particularly diabetes. Increasing by 5 million in just five years, 22.3 million people were living with diabetes in 2012.

Th e economic burden of diabetes grows even faster than its incidence. Diabetes costs, both direct and indirect, will total around $245 billion for 2012, according to the April 2013 Scientific Statement by the American Diabetes Association (ADA), “Economic Costs of Diabetes in the U.S. in 2012.” This staggering figure reflects a five-year increase in diabetes costs greater than the overall cost of medical care as a whole (which holds true even after adjusting for inflation). Th e ADA last undertook an economic burden study in 2007; at that time, diabetes costs were $174 billion. (Other costs not included in the ADA figure include undiagnosed diabetes, which is estimated to cost another $18 billion; prediabetes, another $25 billion; and unknown hidden costs, such as those incurred by nonpaid caregivers or by family members living with diabetes patients.)

Direct and Indirect Costs

Of the $245 billion, direct costs command the larger share at $176 billion, and indirect costs come in around $69 billion. Direct costs include emergency room care, hospital inpatient days, nursing/residential facility use, ambulance services, ambulatory visits, hospice care, podiatry, prescription medications, diabetic supplies, and other equipment and supplies, whereas indirect costs are associated with productivity loss from a combination of absenteeism (workdays missed due to health conditions), presenteeism (reduced work productivity while at work due to health conditions), reduced workforce participation among those with chronic disability, and the productivity lost from premature mortality. Direct and indirect costs break down by age group as well, with most (59%) direct costs attributable to patients ages 65 years and older, whereas 88% of indirect costs derive from those younger than age 65 years.

Not surprisingly, the disease costs substantially more (study findings show from two to eight times higher) when it is poorly controlled and/or associated with complications. Diabetes-related conditions accounting for most of the overall direct costs include heart and renal failure; heart disease, such as conduction disorders, cardiac dysrhythmias, hypertension, myocardial infarction, and chronic ischemic heart disease; cataracts; cellulitis; urinary tract infections; and poor general health.

These conditions combine to increase annual medical expenditures for people with diabetes by 2.3 times over those without the disease. In fact, according to the ADA, “More than one in 10 healthcare dollars in the U.S. are spent directly on diabetes and its complications, and more than one in five healthcare dollars in the U.S. goes to the care of people with diagnosed diabetes.” Notably, hospital inpatient care is the largest piece of this spending, having risen to 48% ( from $58 billion in 2007 to $76 billion in 2012), despite overall hospital inpatient care costs having decreased: of total direct medical costs, inpatient care dropped from 50% to 43% in the same five-year period.

How and why costs have skyrocketed by 41% in five years to $245 billion seems to have less to do with specific economic factors (i.e., treatment costs rising) than with sheer disease predominance, according to the ADA. Diabetes prevalence reflects changing demographics (i.e., older adults show a greater prevalence, and the numbers of older adults are increasing both as baby boomers age and people live longer in general); increases in risk factors, especially obesity; decreasing mortality (i.e., people are living longer with disease due to improved treatments), and better disease detection. Some say that if incidence continues to burgeon, one in three people will be diagnosed with diabetes by 2050. Matt Petersen, managing director, Medical Information and Professional Engagement of the ADA, says, “I believe the key observation to make is that the increased cost from 2007 to 2012 is primarily a result of increased prevalence of diagnosed diabetes. One might think that the availability of new and often expensive medications would have contributed to that increased cost, but in fact the proportion of the cost attributable to anti-diabetic agents remained fl at during that time.”

Despite the availability of several new diabetes medications and despite double the use of such agents, overall pharmacy costs stayed more or less constant over a 10-year period at 12% of diabetes medical spending in 2012. Interestingly, prescriptions to treat diabetes complications cost significantly more than did prescriptions to treat diabetes — at 18% and 12%, respectively.

Reducing Costs

Everyone agrees that this steadily increasing economic burden is overwhelming the U.S. healthcare system. Medicare currently shoulders the costs incurred by 14 million people living with diabetes — almost half of the diagnosed population. Among Medicare, Medicaid, and military programs, in fact, the U.S. federal government pays for 62% of diabetesrelated costs. U.S. federal government 2014 budget proposals to reduce this outlay include shifting more costs to wealthier Medicare recipients and cutting about $350 billion from providers and recipients. Opponents fear that such sweeping changes would limit care access for the biggest and most needy populations — low-income, older, and disabled diabetes patients — as well as cause an overall regression in public health. Other measures, such as the program hosted by the Centers for Medicare and Medicaid that allows patients to mail order their diabetes-related medications and equipment from suppliers who competitively bid to participate (commonly known by the acronym DMEPOS), saved only $202 million in 2011.

The dilemma presented by these current and proposed measures (i.e., effectively reducing care access on the one hand and not saving enough money on the other) leaves many asking, how, then, do we pay this everincreasing bill? In the healthcare sector, however, many say we are approaching the issue from the wrong angle. We should not be looking at how to pay the bill so much as how to prevent the cost from being incurred.

“If the primary driver of the increased costs is increased prevalence, it’s a compelling argument that we should be looking at primary prevention of type 2 diabetes as the most important strategy for containing the costs,” says Petersen. “And prevention of course would not only reduce economic costs, but would also bring the quality-of-life benefits that would come from preventing diabetes in the first place.” Hospital inpatient care is the largest piece of the cost pie (one day is estimated to cost $5,000), but preventing diabetes (or even effectively controlling it) would directly mitigate that expenditure by negating the trip to the hospital.

Thus, the answer to at least part of this problem is self-evident, say physicians and researchers, and is also long backed up by findings from the 2002 Diabetes Prevention Program (DPP). If 95%–98% of diabetes is type 2, and if the risk of developing type 2 diabetes is dramatically increased by obesity, then we need lifestyle interventions targeting obesity to prevent diabetes from developing and thereby stanch the increase in the diabetes base population, which some say is growing by 5,000 people a day.

“We feel prevention is paramount for reducing the future cost of the condition,” says Kelly L. Close, president of Close Concerns, a diabetes awareness organization, and editor-in-chief of diaTribe, an online diabetes news journal. For the other part of the problem, that is, those already diagnosed with diabetes, the answer is optimizing care, she says, adding, “We would like to move away from the ‘treat to failure’ model that so many patients get caught in and move toward new therapies. For example, exploration of annual use of continuous glucose monitoring so that poor management doesn’t escalate.”

The Endocrine Society is fully in agreement that prevention is paramount and urges the federal government to likewise recognize this necessity. The Society’s director of government and public affairs Stephanie Kutler says, “The Society has been working with members of Congress to secure full funding for the [DPP], and the new [ADA] data have helped to illustrate the urgency of our message. These costs will continue to grow unless we do something to prevent more people from developing diabetes, and the proven way to do that is through primary prevention programs like the DPP. But Congress and the Administration must make this a priority and fully fund the program.”

Investing in new drugs and technology as well as in public health programs on diabetes prevention seems to be the consensus among the healthcare sector. “More research into new prevention programs and treatments and cures” should also be a priority, adds Kutler. Perhaps legislators will realize that a twist on the old quote might apply here: “You must spend money to save money.”

—Horvath is a freelance writter in Baltimore, and a regular contributor to Endocrine News

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