Excess Costs of Medical Care for Patients With Diabetes in a Managed Care Population

OBJECTIVE To estimate the excess costs of medical care for patients with diabetes in a managed care population and to determine the proportion of costs spent on treating the complications of diabetes. RESEARCH DESIGN AND METHODS A comparison of 1-year (1994) costs of medical care in the 85,209 members of the diabetes registry of Kaiser Permanente, Northern California, and in 85,209 age- and sex-matched nondiabetic control subjects. Costs were obtained from automated program databases. Costs specifically related to treating acute and long-term complications of diabetes were identified, and the excess costs attributable to each complication in individuals with diabetes were calculated. RESULTS Excess expenditures in individuals with diabetes totaled $282.7 million, or $3,494 per person. Per person expenditures for members with diabetes were 2.4 times those for matched control subjects. The largest proportion of total excess costs was for hospitalizations within the health maintenance organization (38.5%). Nearly 38% of the total excess was spent treating the long-term complications of diabetes, predominantly coronary heart disease and end-stage renal disease. CONCLUSIONS Diabetes is a costly condition by virtue of its high prevalence and high per person costs. A large proportion of these costs are related to treating complications of diabetes. Available evidence indicates that several measures can reduce complication rates. Thus, effective disease management programs that aim to prevent complications could potentially lead to cost savings in managed care settings.