The Episcopal Health Foundation (EHF) engaged Milliman to produce a study with the goal of understanding the cost of type 2 diabetes mellitus to the Texas Medicaid program. Type 2 diabetes is a condition where cells in the body respond poorly to insulin, a hormone that facilitates the entry of blood sugar (glucose) into cells. Over time, the pancreas is no longer able to produce enough insulin, resulting in high blood glucose levels. High blood glucose levels have significant effects on many different body systems, and can cause heart disease, kidney disease, nerve damage, vision loss, and other problems. There are other types of diabetes with different causes, such as type 1 diabetes (generally thought to be caused by an errant autoimmune response to insulin), and gestational diabetes (experienced during pregnancy in women who have never otherwise had diabetes). This report focuses on type 2 diabetes.

This report is an analysis of healthcare claims and enrollment data for Texas Medicaid managed care plans to identify individuals with diabetes or select risk factors and describe their demographics and healthcare cost experience. We relied on data provided by several managed care organizations (MCOs) in the Harris and Jefferson service delivery areas (SDAs) as well as the Transformed Medicaid Statistical Information System (T-MSIS) data maintained by the Centers for Medicare and Medicaid Services (CMS). The Harris and Jefferson SDAs included about 27% of Texas Medicaid beneficiaries in 2021, and T-MSIS includes data for all Texas Medicaid beneficiaries.5 Key findings from national literature and from our analysis include the following:

Nationally, the Centers for Disease Control and Prevention (CDC) reports that:

• About 11.3% of U.S. adults and 11.5% of adults in Texas have type 2 diabetes, and nearly a quarter of them may not realize they have it.6
• About 38% of U.S. adults, representing almost 100 million people, have prediabetes, which increases the risk of developing type 2 diabetes in the future.

In Texas:

• The Texas Medicaid program provided healthcare coverage to 5.63 million people in fiscal year (FY) 2021, at a cost of about $39.3 billion in benefit expenditures.
• In FY2021, adults (those of any enrollment group other than children) accounted for about 39% of Medicaid beneficiaries and about 70% of Medicaid medical expenditures in Texas.
• Based on an analysis of T-MSIS data, we identified about 11.2% of adults in the Texas Medicaid population as having diabetes in FY2021, and another 9.5% to 11.1% of adults as having at least one of the identified risk factors studied. This likely understates the true prevalence compared to more comprehensive estimates due to known limitations of measuring prevalence of healthcare conditions from claims data.
• Pairing these prevalence findings above with an analysis of cost data contributed by several MCOs, we estimate that total healthcare costs for individuals with diabetes covered by Medicaid in Texas may have been between $6.2 billion and $8.1 billion in FY2021 (including both state and federal payments). This represents about 15.9% to 20.6% of total Medicaid medical benefits spending in FY2021, or about 22.7% to 29.5% of spending for adults.
• Our estimates of total healthcare costs for the population are likely understated because an analysis of healthcare claims data alone will not identify all people with diabetes.

Takeaways:

• While type 2 diabetes has a significant impact on health outcomes and healthcare costs for those who experience it, some of its key risk factors are well understood, and potentially modifiable.
• Programs that can effectively reduce the incidence of diabetes may be able to generate healthcare cost savings—though whether there will be savings net of intervention costs depends on the effectiveness of the program, and the costs of implementing it.
• Implementation of diabetes screening practices that are consistent with clinical guidelines