Cost of diabetes threatens to bankrupt health system

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In Hawai'i, nearly one in two fee-for-service Medicare dollars is spent on patients with diabetes, and private insurers also are feeling the financial strain of the disease.

For employers and consumers, that means higher healthcare premiums.

Because of diabetes' myriad complications, people with diabetes have much higher use of hospital inpatient care, outpatient and physician office visits, emergency room visits, nursing facility stays, home health visits, visits with other health professionals, and prescription drug and medical supply use than people without diabetes, according to a report by the American Diabetes Association on the economic costs of diabetes in the United States.

Average annual medical expenditures for a person with diabetes are $11,744, more than two times greater than the cost for someone without diabetes, the report said.

Diabetes costs the country $174 billion annually, a 32 percent increase over the past five years. The costs include $116 billion in diabetes-related medical expenditures and $58 billion in indirect costs from absenteeism, lost productivity and early death.

State health officials set the price tag for diabetes in Hawai'i at close to $1 billion.

Hospital charges alone for diabetes more than doubled in the past 10 years from $303 million in 1997 to $746 million in 2007, according to the Hawaii Health Informatics Corp.

The Hawaii Medical Service Association, the state's largest health insurer, reports that almost 19 percent of benefits paid in 2007 were for the care of members with diabetes.

"The impact of diabetes has been very significant. In fact, there are about 40,000 members diagnosed with diabetes, with nearly 40 percent of them having coronary heart disease in addition to diabetes," said senior vice president Dr. Richard Chung.

Kaiser Permanente Hawai'i has 220,000 members statewide, including 16,000 who have diabetes.

"Kaiser Permanente has aggressive preventive care and care management for our members because diabetes, if left untreated, can lead to heart disease, stroke, kidney disease, amputation and blindness. We'd like to prevent this for all our members, No. 1, for their personal well-being, and No. 2, because it does increase costs," said spokeswoman Lynn Kenton.
it's getting worse

The state Department of Health estimates that 102,000 people in the Islands have diabetes; nationally, the number is nearly 24 million.

The nation's growing elderly and minority populations — groups at significantly higher risk of the disease — mean millions more will suffer from diabetes in the years to come. And with more people developing the disease at an earlier age, they will be living longer with its costly complications.

Medicare, the federal health insurance program for people 65 or older, reported $234.5 million in fee-for-service spending for people with diabetes in Hawai'i in 2005. That's close to half of total spending of $532.8 million, and a higher percentage than on the national level, where 30 percent Medicare spending is for people with diabetes.

Asians, Native Hawaiians and Pacific Islanders, groups at higher risk for the disease, make up 38 percent of Medicare enrollees in Hawai'i but account for 42 percent of enrollees with diabetes, according to the Centers for Medicare and Medicaid Services.
fewer whites at risk

By comparison, whites, who comprise 28 percent of the state's Medicare enrollees, account for only 19 percent of the program's diabetes patients.

Medicare figures reflect spending on total medical care for people with diabetes, not just on treatment for diabetes. Since the disease is so closely connected to hypertension, stroke, kidney disease, blindness and other complications, it's difficult to isolate costs specific to diabetes, said Jack Cheevers, spokesman for the Centers for Medicare and Medicaid Services in San Francisco.

Majken Mechling, executive director of the American Diabetes Association in Hawai'i, said some businesses have yet to recognize the bottom-line impact of chronic illnesses such as diabetes, which can develop over years without notice.

"The cost of healthcare is so exorbitant that it really is something they have to look at," Mechling said. "One of the biggest barriers is that people don't realize the seriousness of a situation unless it's in their face, and diabetes is one of those diseases that's 'out of sight, out of mind.' "

Mechling pointed to estimates that one out of two Hawai'i children born in 2000 can be expected to develop diabetes in their lifetime, if current trends continue.

"That's the future work force. Employers may not recognize the impact yet, but it's coming," she said. "If there was any message we could put out there, it's that it can be prevented in many cases."

One group that got the message early is the Hawaii Business Health Council, formed in 1981 to improve the health of employees and reduce healthcare costs.
a chronic pairing

Executive director Gary Allen said the group's focus has been on chronic diseases, and especially diabetes and cardiovascular disease, which consume 50 percent to 60 percent of an employer's healthcare costs.

"They are so closely aligned it's hard to separate the two. Many diabetics have cardiovascular issues," Allen said.

In 2006, the business health council started a pilot project with six major employers to provide workers with free after-hours counseling to improve their lifestyle habits and better manage their diabetes.

A network of 47 certified diabetes educators and pharmacists from Times Supermarkets, Longs Drugs, Kaiser Permanente and City Pharmacy was enlisted to serve as "life coaches" to counsel the initial 82 employees who joined the program.

"It is done in a fashion where the individual is given the power to make the changes. They are not forced, they are not scolded if they do or they don't," Allen said. "What we found is that individuals will accept change if they have control versus if they are forced to change."
employers invested

A key incentive for participation and compliance was that employers agreed to pay their workers' co-payments on prescription medication.

"From a financial viewpoint for the employers, they experienced a 2-to-1 return on their investment. For every dollar they put in, they got $2 back in healthcare savings."

The participating employers were Outrigger Resort & Hotels, Punahou School, Times Super Markets, Finance Factors, Servco Enterprises and the state Department of Commerce and Consumer Affairs. Enrollment was opened in June to any business, and at least five more have joined, with employee participation up to 160, Allen said.

Weight management and nutrition programs to reduce obesity, a major risk factor for diabetes, are rarely covered by health insurance without a diagnosis of diabetes or other chronic disease.

A recent report on obesity by the Trust for America's Health and the Robert Wood Johnson Foundation notes that Hawai'i is one of 10 states that do not include specific coverage for nutrition assessment and counseling for obese or overweight children and adults in their Medicaid programs for low-income patients.
a tough sell

Although the benefits of prevention seem obvious, but it's a tough sell to many on the business end of healthcare who are reluctant to embrace programs that reap benefits years down the road, said Dr. Wilfred Fujimoto, a diabetes researcher and retired endocrinologist.

"Treatment is covered by insurance but diabetes prevention programs are not always covered. The system is designed to avoid the cost of prevention while assisting those who fail," he said.

Especially in markets with multiple health insurers, there may be little incentive for an insurer to cover prevention programs because of the likelihood patients might switch to another health plan at some point, denying the initial insurer a return on its investment, Fujimoto said.

It's a frustrating dilemma for those who study the disease and work with patients with diabetes.

"We already know how to treat diabetes, and we actually know what to do to prevent more people from getting diabetes, but the medical care system does not seem to make it happen," said Dr. J. David Curb, a professor at the University of Hawai'i John A. Burns School of Medicine and diabetes researcher with the Pacific Health Research Institute.

"It's not clear whether it's the patient, the doctor or the system."

Curb said weight management and other preventive programs generally are not covered because of short-term financial interests in generating profits.

"Even when you're sick, the system doesn't pay for things to keep you from getting sicker," he said. "I think it's because there's not an immediate payoff for the insurance company or the system. The focus is on treating things that will pay off in a year or two. We don't have a system that thinks ahead 10 or 20 years. That's just the way it's set up, and it's very hard to change.

"It's a very complex problem. It's not that they don't care, but they have a lot of other pressures."

The nonprofit Trust for America's Health recommends tax incentives for employer-provided wellness programs and requiring public and private insurers to provide preventive services.

Fujimoto and Allen both suggested employers negotiate such benefits into their health plan contracts.

Diabetes consultant Jane Kadohiro, an assistant professor at the University of Hawai'i School of Nursing and Dental Hygiene, said more pressure should be placed on third-party payers and Medicare to start covering diabetes education programs. "Not just lectures and pamphlets, but to sit down and help patients incorporate healthful lifestyle into their lives," she said.

"The healthcare system is not based on prevention, it's based on treating the sick. And the more sick you are, the more it costs and the more insurance coverage you get. It's backwards," she said.
One local approach

Health plans offered by HMSA, which has 700,000 members statewide, do cover participation in its Diabetes Care Connection program started in 2000, according to spokeswoman Laura Lott.

The program, administered by Healthways Inc., uses pharmacists, dietitians, nurses and other health educators to provide regular support and diabetes education in addition to physician care.

Care Connection automatically identifies potential program participants via claims information, and is able to identify and enroll many more patients in this program than traditional "opt-in" programs. Lott said 45,000 members are enrolled.

Chung said the program has improved the quality of care for people with diabetes and tempered some of the cost increases associated with the disease.

HMSA encourages members to lighten up by subsidizing participation in Weight Watchers.

Almost 4,800 members signed up last year to take advantage of the program, and 2,260 have joined so far this year, Lott said.