OBJECTIVE - To estimate direct medical costs of managing the complicat
ions of type 2 diabetes. RESEARCH DESIGN AND METHODS - Costs were esti
mated for 15 diabetic complications by applying unit costs to typical
resource-use profiles. Resource use and unit costs were estimated from
many sources, including acute care discharge databases, clinical guid
elines, government reports, fee schedules, and peer-reviewed literatur
e. For each complication, the event costs are those associated with re
source use that is specific to the acute episode and any subsequent ca
re occurring in the Ist year. State costs are the annual costs of cont
inued management. All costs are expressed in 1996 U.S. dollars. RESULT
S - As expected, the more severe or debilitating events, such as acute
myocardial infarction ($27,630 event cost; $2,185 state cost), genera
te a greater financial burden than do early-stage complications, such
as microalbuminuria ($62 event cost; $14 state cost). Yet, complicatio
ns that are initially relatively low in cost (e.g., microalbuminuria)
can progress to more costly advanced stages (e.g., end-stage renal dis
ease, $53,659 state cost); therefore, minor complications should also
be considered in any economic analysis of diabetes. CONCLUSIONS - The
recent literature has lacked cost estimates that may be readily transl
ated into patient-level cost inputs for an economic model. Emerging th
erapies that may reduce the incidence of some diabetic complications w
ill need to be scrutinized economically in today's cost-conscious envi
ronment. The cost. estimates from this study provide one piece of the
economic analysis needed to evaluate these new interventional therapie
s.