Health Insurance for Diabetics
Empowering diabetics to take control of their health
by Tony Novak, CPA, MBA, MT, updated 2/19/2013
Resources are listed on a state-by-state basis: Jump to listings of health plans for diabetics
The video overview of "health insurance for diabetics" by OnlineAdviser Tony Novak was removed February 19, 2013 following the halt of the PCIP health plan that was a core part of the recording. A replacement video will be recorded soon.
Diabetes cost overview
Financing the care of diabetics has become the most challenging task of U.S. public and private insurance plans. The Center of Disease Control estimates that 24 million Americans have diabetes and that the disease is now the 7th leading cause of death in the United States. An additional 57 million have pre-diabetes. In about 60% of cases, diabetes is also associated with obesity. From a health insurance standpoint, the need for expensive and often lifelong care make diabetes an overwhelming cost driver. Diabetics have medical expenditures more than twice as high as those who do not have diabetes, with total annual health care costs for a person with diabetes topping $11,744 in 2007 according to the American Diabetes Association. The out-of-pocket costs (expenses not paid by insurance) for treating diabetes is reported to average about $350 per month. A study reported in the February 15, 2013 issue of Diabetes Care triggered an increase in fears among medical professionals that the health care system may be overwhelmed with younger, sicker people with serious diabetes complications, especially Type 2 diabetes.
Political and legal issues
While both the number of patients and the costs of treating each diabetic continue to climb, insurance premium payers increasingly resist paying for what they view are a lifestyle management issue rather than acute medical care. Under the current medical predictions, diabetes and associated conditions will eventually account for the majority of our nation's medical bills. Diabetics typically cannot pay for the cost of their own medical treatment so must rely on the transfer of funds from healthier pools of the population through an employer or government plan. Every state has passed laws that improve availability of insurance for diabetics, yet many cannot afford the cost of this insurance. In some cases limited benefit insurance is available to pay for part of the care that the patient can afford. We do not yet have a national health care plan to bring full coverage to all diabetics at a cost that each individual and the country as a whole can sustain.
In June 2012, former secretaries of Agriculture Glickman and Veneman; and former secretaries of Health and Human Services Shalala and Leavitt, who co-chair the Bipartisan Policy Center’s Nutrition and Physical Activity Initiative released a report titled "Lots to Lose - How Obesity is Costing America" that confirms many of the links between obesity, diabetes and increased financial burdens.
In 2010, only 19 percent of diabetics were adequately managing their diabetes, according to government research released in 2013 by the U.S. National Institute of Diabetes and Digestive and Kidney Diseases.
During the three year period from 2014 until 2018 our nation's commercial health insurance system will convert from coverage that focuses primarily on covering unexpected medical bills to the management and control of existing and ongoing medical problems like diabetes. During this transition period health insurance is controlled primarily by state law so coverage options vary sharply depending on location of residence. Because the available insurance options vary significantly from state to state, we cover these options separately for each state.
Coverage for diabetes under Medicare and Medicaid is expected to be reduced in coming years as part of the overall plan to reduce government spending on these programs. We expect that coverage for routine treatment of diabetes in the U.S. will shift away from these programs and onto supplemental individual health insurance plans as we see in other countries also facing the growing impact of diabetes. Insurance coverage will shift from drug-based therapy to treatment focused on behavioral change.
Expected medical costs for diabetes
The most common expenses for diabetics are prescription medications including insulin, medical supplies and equipment. These include insulin syringes (common name brands BD Ultrafine, Levemir®, Monoject, NovoFine®, Ulticare, UniFine, UltiGaurd), insulin (common name brands Apidra, Humulin, Lantuo, Lente, Levemin, Novolog, Novolin, NPH Insulin, Regular Iletin, Regular Insulin, Velosulin), insulin pumps (common brand names Animas, Deltec, Medtronic), Blood Glucose Test Meters and Test Strips (Abbott Freestyle®, Abbott Flash, Accu-Chek Compact®, Ascensia Elite, Ascencia Breeze, Ascensia Contour, Lifescan One-Touch©, Prestige), injectable medication (common brand names Byetta, Exenatide), injection and Symlin (Pramlintide Acetate) injection, and oral medications (Acarbose, Avandia, Chlorpropamide, Diabinese, Glipizide, Glucophage, Glucotrol, Gylset, Meglitol, Metformin, Prandin, Precose, Repaglinide, Rosiglitazone). These medications and supplies are not covered by all insurance so this leaves a significant cost to the individual diabetic and their family. Even the insurance plans that cover diabetic prescriptions and supplies may still have significant deductibles, co-payments and other requirements that make the insurance coverage insignificant relative to the overall out-of-pocket costs.
Diabetics have total medical expenditures more than twice as high as those who do not have diabetes, with total annual health care costs for a person with diabetes topping $11,744 in 2007 according to the American Diabetes Association.
While most states have laws that mandate coverage for diabetes, the most common insurance misunderstanding stems from the differences in regulations for various types of insurance so that many of the policies available to individuals outside of an employer-provided plan do not cover the cost of common diabetic expenses. While behavioral-based therapy is more cost-effective than drug-based therapy, for example, behavior-based counseling services are not widely covered by insurance.
We estimate that average out-of-pocket costs for diabetics who are not covered by employer plans or public health plans runs from $200 to $300 dollars per month. This cost is in addition to the cost of insurance.
Three separate considerations for insurance coverage
Diabetics seeking health insurance must consider three separate issues that affect each policy:
1) Am I eligible? Many of the lower-priced commercial health insurance plans are generally not available to diabetics. The links in this article and other resources at Freedom Benefits list the policies available to diabetics on a state-by-state basis.
2) Are diabetes expenses covered? Some policies have blanket exclusions for pre-existing conditions or do not include coverage for specific items like prescription drugs or outpatient medical supplies. See the description of coverage and the list of excluded items that is required to be provided for each health insurance policy.
3) What are the waiting periods and out-of-pocket expenses? Even when diabetes expenses are covered, the policyholder is responsible for all costs incurred during the waiting period or for the amount of the policy deductible or co-payments. These provisions should be clearly explained on the enrollment materials. If any questions remain, ask an enrollment adviser or use the OnlineAdviser email support service.
Eligibility works inversely with coverage. For example, the insurance policies that accept diabetics are least likely to cover the cost of diabetic medical supplies. The most common consumer mistake is assuming that if one of these conditions is met then the others are automatically satisfied. For example, once determining that you are eligible for a specific insurance, this does not mean that the policy will take over payment of current diabetes costs.
Managing insurance expenses
The primary strategy of diabetics who cover their own medical expenses is to find an affordable solution to bridge the gap until January 2014. The interim coverage may not cover all expenses but provides two more important benefits: 1) ensures access to the medical system when necessary, and 2) avoids triggering a new "waiting period" on the next health plan that would other wise apply following a gap in coverage. As a result, we see an increase in the number of diabetics willing to enroll in min-med or temporary insurance plans.
The cost of maintaining insurance for diabetics is more likely to require changes to overall financial and life choices than for non-diabetics. This is primarily due to lack of access to lower cost insurance alternatives. Total lifetime medical costs for a diabetic, (calculated as the cost of insurance plus out-of-pocket expenses for up to age 65) is more than twice the amount as for non-diabetics, making health care their second highest expense (second only to housing). Inadequate insurance planning results in high levels of stress, financial disaster (often including bankruptcy) and periodic disruptions of medical care. Without concentrated and planning, adequate insurance is likely to be unaffordable. Yet making the required life changes required to handle the financial burden of diabetes is very difficult for many of those affected by the disease.
FreedomBenefits.net publishes a breakdown of the insurance options for diabetics on a state-by-state basis. Cost of insurance varies sharply depending on state of residence. We recommend that diabetics first enroll in the pre-existing major medical insurance plan for their state (or comparable program) and then find supplemental coverage to stabilize the costs not covered by primary coverage. When a major medical insurance is not available or is unaffordable, a limited benefit plan may be the next best choice. In any event, the insurance solution must be affordable on a long term basis. It makes no sense to enroll in an insurance that is not sustainable based on personal finances. The affordable coverage choices vary depending on location of residence.
Select you state to read more about health insurance options for diabetics where you live:
These articles will be updated as new information and choices become available. More information on current diabetes research is available on the Health and Humans Services Web site and from the American Diabetes Association. Each of the individual state insurance departments, accessible from the insurance exchange summary page on this Web site, has additional information on insurance mandates for diabetics who are eligible for group or public insurance options. Use the U.S. state map on the home page to access news and additional information from the state insurance departments.
Diabetic coverage after health reform
One million diabetics are expected to be added to state Medicaid plans when health reform measures are implemented in full, according to a January 2012 report by Kaiser Family Foundation. The report states "Medicaid plays an important role in ensuring that the relatively high and complex care needs of lower-income, nonelderly adults with diabetes are met, while keeping out-of-pocket expenses at relatively modest levels". Eligibility requirements are expected to be loosened to expand Medicaid enrollment from 60 million individuals in 2010 to about 76 million in 2016. While it is clear that Medicaid will play a larger role in coverage for diabetics, it is unclear how that coverage will work and how Medicaid will provide coverage to more people with a smaller amount of funding per covered individual. A study (cited in the same Kaiser Family Foundation report) of current diabetes patients covered by Medicaid indicates that these patients incur significantly higher out-of-pocket expenses for their medical care as compared to non-diabetics covered by Medicaid.
On February 16, 2013, the U.S. Department of Health and Human Services announced that it would no longer accept applications to the federal Pre-existing Consition Insurance Plan (PCIP), leaving some diabetics without a source of commercial major medical insurance. Alternatives are primarily short term measures designed to help diabetics bridge the gap until the next phase of health care reform takes effect on January 1, 2014.
Freedom Benefits continus to provide enrollment support for the state-sponsired Pre-existing Condition Insurance Plans that were not affected by the federal governemnt decision to stop offering its federal PCIP.
April 26, 2012 - We continue to receive several calls or e-mails each day requesting clarification of health insurance options for diabetics. The advice we provide in many of these inquiries can be summarized as follows:
- If COBRA continuation is (or was) an option and you decline(d) to take it due to cost or some other reason then no other major medical insurance option is immediately available. Declining COBRA can have significant impact on your future coverage.
- In the situation above, mini-med or supplemental coverage like Core Health Insurance is still available.
- The PCIP plan may seem expensive but it's a great deal considering the coverage offered. The federal government pays most of the cost and your premium represents less than 40% of the average cost of care for a participant in this plan.
- PCIPs can be preceded by or combined with mini-med or supplemental insurance like Core Health. One state insurance official disagrees but the balance of information supports this conclusion.
- HIPAA plans available in 6 states allow an applicant to be accepted by any commercial medical insurance carrier in the state (see the state listings above). However, the premium rates will be the maximum allowed by law; typically 40% higher than standard rates.
November 3, 2011 Online resources represent a growing portion of the educational and support services for diabetics. A study published in the Journal of General Internal Medicine titled "Online Social Networking by Patients with Diabetes: A Qualitative Evaluation of Communication with Facebook " examines the impact of 14 of these resources. Meanwhile the federal Department of Health and Human Services has issued a number of publications and announcements this year indicating its intention to focus on behavioral modification of diabetics as the primary method of long term cost control of the disease.
June 30, 2011 The American Diabetes Association along with the U.S. Department of Health and Human Services and various insurance companies have focused on promotion of results of a 10 year study led by Dr. William Herman at the University of Michigan that indicates that lifestyle changes are more effective than medicine for type 2 diabetics. These results had long been suspected within the diabetic treatment community but strong scientific evidence was lacking. We anticipate that both public and private insurance coverage will be modified to include increased coverage for diabetic counseling and decrease coverage for drugs like Meltformin.
April 5, 2011 Maryland Science Center is hosting "Diabetes: A Deeper Look" in the spring of 2011. Check it out at http://www.mdsci.org/exhibits/diabetes.html