Written by: Compliance blogger
The financial ramifications of diabetes on employers are far-reaching and varied. The Centers for Disease Control and Prevention (CDC) states that chronic diseases such as diabetes and related lifestyle risk factors are the leading drivers of increased health care costs for employers. In addition, it is estimated that about 1 in 4 health care dollars is spent on people with diabetes. This isn’t hard to believe when you consider that every 21 seconds a U.S. adult is diagnosed with diabetes as reported by the American Diabetes Association (ADA). Diabetes is a chronic condition that often results from smoking, being overweight, inactivity, high blood pressure, high cholesterol or high blood glucose. Overall, the diabetes epidemic is costing employers billions of dollars each year in insurance premiums, other medical expenses and lost productivity.
Chronic health conditions such as diabetes inflict more than half of the population. Similarly, nearly half of the population receives health benefits through an employer-sponsored health plan. For those employers offering such plans, healthcare is one of its greatest expenses trailing the cost of labor. Health insurance premiums have reached over $20,000 a year for an employer-sponsored family plan and employers often cover nearly 70 percent of that cost, according to the annual Kaiser Family Foundation survey.
In 2017, the ADA estimated the cost of diabetes to be $327 billion! Diabetes and similar chronic conditions tend to drive overall healthcare premiums upward for both employers and employees. Since group healthcare premiums are determined largely by the population’s previous claims, all of this equates to higher healthcare costs for all involved. This can be exemplified by the fact that health insurance premiums for employer-sponsored family coverage have increased by 87% in the last decade as stated by The Partnership to Fight Chronic Disease.
As determined by the ADA, about 60% of the diabetes claims that are driving up premiums are due to hospital inpatient care and prescription medications. In 2014, a total of 7.2 million hospital discharges and 14.2 million emergency room visits were reported with diabetes as any listed diagnosis among U.S. adults, says the CDC. The average person with diabetes incurs about $16,750 in annual medical expenses. This is about 2.3 times more than those without diabetes and is largely due to the costs of medical visits and medications. With these statistics, it is no wonder that the prevalence of diabetes and other chronic conditions is causing a great financial burden on U.S employers and employees alike.
Another cost that employers absorb when it comes to diabetes and other chronic conditions is reduced productivity and missed workdays. According to the CDC, diabetes is 1 of 5 chronic conditions or risk factors that costs U.S. employers over $36 billion a year in employee absenteeism. In 2017, Gallup and Sharecare’s study indicated that a full-time employee with diabetes misses an average of 5.5 extra workdays per year because of their condition. Likewise, a part-time employee with diabetes misses about 4.3 days extra workdays each year. This equates to almost 58 million days of missed work annually among employees with diabetes. The study went on to factor a cost of $354 per day for the average worker across occupations and concluded that absenteeism related to diabetes costs employers $20.4 billion each year.
Diabetes is an epidemic affecting more than 30 million people in the U.S. and the cost to their employers is evident. However, there are steps that employers can take to help prevent diabetes in their workforce and reduce their organization’s health care spending. The CDC recommends the following:
- Include prediabetes screening and testing in annual biometrics screenings.
- Refer eligible individuals to a CDC-recognized diabetes prevention lifestyle change program or encourage them to speak with their doctor about enrolling in the program.
- Promote awareness of prediabetes to employees and their families.
- Encourage senior leadership to get screened themselves and demonstrate a commitment to diabetes prevention.
- Work with insurance carriers to include CDC-recognized lifestyle change programs as a covered benefit for all employees.
- Locate available programs at Find a Program.
- Offer a lifestyle change program at your worksite. Visit the National DPP Customer Service Center to learn more.
- Use the CDC Diabetes Prevention Impact Toolkit to weigh the costs and benefits of a National DPP lifestyle change program or use the AMA DPP Cost Saving Calculator to calculate your potential medical cost savings from providing the National DPP as a covered benefit.
- Enter information unique to your population into this calculator to see potential cost savings for your population.
It is obvious that diabetes is costing employers billions in insurance premiums, medical expenses and lost productivity each year. Despite this, employers do have options and can be part of the solution to this epidemic. One step is for employers to become more educated about diabetes and other chronic conditions affecting their workforce. To do our part, we will be presenting a series of blog articles to help in the mission of educating the public about this serious condition. The articles will discuss how to code diabetes, managing diabetes through telehealth, and common complications of diabetes.