Introduction: Disease conditions such as end-stage renal disease (ESRD), which have severe consequences of disability and mortality, can generate substantial costs for large employers providing life insurance and disability insurance benefits. This study is the first to examine such disease-related nonmedical costs for employers and models the following employer-paid costs for ESRD in patients with diabetes: 1) life insurance benefits, 2) disability benefits, and 3) cost of replacing a worker.
Methods: We simulated a hypothetical cohort of 10,000 individuals with the age and sex distribution of a typical employee population in the United States. Data sources for the model parameters included the United States Renal Data System and proprietary life insurance and disability insurance claims databases. In addition, we used published information to identify the structures of typical employee benefits programs and annual salary information and to estimate the cost of replacing lost workers.
Results: The study estimated that employers may incur life insurance costs of 55,055 dollars per ESRD-related death, disability insurance costs of 31,671 dollars per ESRD-related disability, and worker replacement costs of 27,869 dollars per ESRD-related lost worker. Overall, the total monthly cost per employee with ESRD and diabetes was 5439 dollars.
Conclusion: Our study finds that, other than the large direct medical costs documented in literature, ESRD onset also results in substantial nonmedical costs for employers. As employers continue to debate changes in the structure of future health plan benefits to reduce health care costs, they should consider potential indirect cost savings of providing affordable access to medical care that prevents or delays disability and mortality in their workers.