Estimating the Cost of Illness: The Case of Diabetes Gary Olin and Steven R. Machlin and Jeffrey Rhoades

We use the Medical Expenditure Panel Survey to estimate the direct medical costs of diabetes. Separate estimates of the cost of diabetes are developed from an attributable risk procedure and a two-part regression model. Costs include expenditures to treat diabetes, chronic complications of the disease, and co-morbidities requiring additional health care resources because the person is diabetic. The cost estimates range from $79.1 billion based on attributable risk to $88.8 billion based on the two-part regression model, but the difference is not statistically significant. These estimates are derived from the actual health care use and expenditure patterns of the disease population. They indicate that 59 to 66 percent of health care spending by diabetics for physician and hospital care and prescription medicines should be attributed to the disease itself. Gary L. Olin, Ph.D. Agency for Healthcare Research and Quality Division of Survey Operations Center for Financing, Access, and Cost Trends 540 Gaither Road Rockville, MD 20850 [email protected] Steven R. Machlin, MS Agency for Healthcare Research and Quality Division of Research and Survey Methods Center for Financing, Access, and Cost Trends 540 Gaither Road Rockville, MD 20850 [email protected] Jeffrey Rhoades, Ph.D. Agency for Healthcare Research and Quality Division of Survey Operations Center for Financing, Access, and Cost Trends 540 Gaither Road Rockville, MD 20850 [email protected]