The Rising Cost of Diabetes Care: Annual Variations in Expenditures, Decomposed by Price and Utilization

This project aims to analyze health care spending for patients with diabetes from 2006 to 2010. We begin by reviewing descriptive data on rising health care costs and the rising prevalence of diabetes nationwide, with a focus on the state of Florida. In our analysis, we use inpatient hospital data from Florida to construct an index that measures changes in health expenditures for diabetics. Based on these calculations, inpatient hospital spending on diabetes increased 23% for those insured by Medicaid, 25% for those insured by Medicare, and 10% for those with private insurance. We decompose these expenditure indexes into price and quantity components to understand whether increased spending is driven by higher prices or increased utilization. These indices are further broken down into age and sex cohorts. Overall we find significant variation in price and quantity changes, with the highest price increases for Medicaid recipients and greatest utilization increases for those with private insurance. Shifts in expenditures for females were generally driven by increased utilization, while shifts in expenditures for men were driven by price increases.