Here's the problem. The number of Americans who have diabetes is growing at an alarming rate, as are the medical costs of treating the disease: In 2007, those costs added up to $116 billion, according to the American Diabetes Association. Yet there doesn't seem to be much you can do to bring those costs down. Intensive interventions, such as disease management, may help patients avoid a leg amputation, heart attack or blindness. But they also run up costs in a way that doesn't appear to pencil out as saving significant dollars.
Michael O'Grady sees another way to construe the math--for diabetes as well as other chronic diseases. O'Grady, of the National Opinion Research Center at the University of Chicago, co-wrote a study on how to use clinical information to project government health spending. He sees a big difference between how economists and epidemiologists view a disease like diabetes. The view of cost savings depends on which of them is holding the calculator.
Economists, O'Grady notes, tend to run their models over a 10-year timeline. That's as far out as most government budgets go in trying to predict costs. Epidemiologists, on the other hand, look out over a much longer time horizon. They view a disease and its course over the life of the patient. So their models pick up on medical problems that don't usually show up for years with an illness such as diabetes--problems that could be avoided or diminished in severity if preventive or intensive treatment is available at the onset of the disease and continues over the years.
The distinction between the economist's and the epidemiologist's views is important. If your window goes out only 10 years, you don't see much of an economic benefit from costly investments in disease management. But if you look at diabetes as an epidemiologist does, you notice big benefits in the second decade. Those benefits stem from avoiding, say, hospitalization for the amputation of a leg or for a heart attack. By year 15, the cost differential is substantial. At that point, the annual bill for a diabetic who receives intensive medical care is about $1,200 less than one who receives conventional treatment.
Now that's real savings.