Human Resources
Thought Leadership

Ask Our Expert: Managing Employee Diabetes Will Lower Your Company's Health Care Cost

Jennifer BoehmWe've asked our expert, Jennifer Boehm, a principal in Aon Hewitt's Health Management Consulting practice, to respond to your question on how managing the diabetes care of your employees can lower your company's health care cost. If you'd like to ask a question about managing your health care plans or about any other pressing human resources challenges you might be facing, e-mail us. We'll share responses to select questions on a regular basis.

Question: I recently read information on your Web site regarding the effect diabetes care (or the lack of) can have on employer health care cost. You stated that managing this specific illness may help my company save thousands of dollars a year. Please tell me, how can focusing on one disease have such a huge impact on our company's medical cost?

Answer: According to the Centers for Disease Control and Prevention, diabetes is the seventh-leading cause of death in the United States. Diabetes affects 24 million Americans — or 8 percent of the U.S. population — and another 57 million Americans have prediabetes or elevated blood sugar levels, which puts them at increased risk for diabetes. These figures are projected to double by 2025. The disease not only affects individuals, but also has significant financial and productivity consequences for U.S. companies.

Most companies are not aware of their current spend on avoidable direct medical costs attributed to diabetes. The average direct medical cost to care for an employee with diabetes is approximately $13,000 a year — more than five times the cost for a nondiabetic. A typical employer with 9,500 employees and 500 pre-65 retirees spends $18 million to $22 million on direct medical care for diabetics covered in the plans. These numbers jump notably when adding indirect costs, such as lost work time, disability expenses, and premature deaths.

Most employers recognize the severity of the issue. There are significant opportunities for companies and their diabetes vendors to help manage cost, but many don't know where to begin. Here are three steps employers can take to understand the financial impact of the disease and the diabetes risks within its employee population:

1. Estimate the current number of diabetics and prediabetics in your population and associated current costs.

2. Analyze your company's current employer and vendor programs, participation, and clinical outcomes compared to best practice protocols drawn from externally recognized institutions.

3. Use your analysis to identify areas of opportunity with associated ranges of potential savings.

Employers have the power to create programs, incentives, education, and support to help their diabetic and pre-diabetic populations better mange their condition, thereby mitigating the direct medical costs of complications stemming from complex co-morbidities and/or unmanaged care. Now is the time to act!

For additional information on diabetes trends please read the Hewitt article titled
Chronic Disease Analysis — Diabetes Trends.

About Our Expert
Jennifer Boehm is a principal in Aon Hewitt's Health Management Consulting business. She leads Hewitt's effort on a diabetes care solution for clients. Jennifer also leads the design and development team and is Hewitt's national thought leader for innovative health plan design. She is frequently quoted in various publications and presents at several conferences each year. In 2007, Business Insurance magazine named Jennifer one of its 50 "Women to Watch". Jennifer earned a BBA from Georgia State University and has been with Aon Hewitt for 12 years.

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