Is a Healthy Diet Really More Expensive?

I’ll preface this by saying up front that the following text is going to be a high-level generalization, but meant to provide an example of how much our diets can cost us in health care costs. I’ll continue to dig deeper into these numbers and do further analysis, as there is a direct link between the food we eat and how much we spend on healthcare, but the following is meant to illustrate that link at a high level. TLDR; buying healthy groceries is far more cost effective than paying for the costs associated with diabetes.

Diabetes is an obvious place to start when linking health care spending to diet, as it’s one of the most well-known chronic conditions that can be fully reversed by changes in diet and lifestyle.

Nomi Health looked at data from employers in the US and found that in 2020-2021, members with diabetes cost about $20,000 per year, a cost which is increasing at 20% per year, much higher than general medical inflation. Let’s remember that many people with diabetes don’t just have diabetes, but also have additional chronic conditions and complications; as an example, Nomi Health found that diabetics with kidney disease cost about $68,000 per year in the same time period. 

This information was based on analysis from Artemis Health, a company owned by Nomi, and one I’m familiar with based on my work as a benefits consultant, and they house medical claims data from large employers. These numbers make sense to me based on my work as an actuary, and particularly when we know that 25% of US healthcare spending is for the approximately 11% of the population that has diabetes, 90-95% of which are type II diabetes cases.

So what do those dollar amounts mean to the average person? Given that most people in the US get their healthcare from their employer, I looked to the Kaiser Family Foundation to see what the average premium, deductible, and out-of-pocket maximum is for a single person. In 2022, the average premium paid out of your paycheck for coverage was $1,136 per year for a high deductible plan and $1,459 for someone with a PPO plan. Now, this is likely the best case scenario for premiums for workers considering if you have a spouse and/or children on your plan, you are probably paying a higher rate per person since employers usually subsidize costs for dependents at a lower rate than they do employees. And this is still only 15-18% of the total premium, meaning employers are picking up the bulk of the bill.

The average annual deductible for a single person enrolled in an employer plan in 2022 was $1,763, though in reality that could go up to $7,500 for someone enrolled in a high deductible plan or $9,100 for someone in a PPO plan based on 2023 IRS limits. The average out of pocket maximum for a single person in an employer plan in 2022 was $4,355, meaning that’s the most they could pay out of pocket for medical and Rx expenses. Again, these numbers could be higher for someone enrolled in family coverage, as there are aggregate deductibles and out of pocket maximums that are higher than individual amounts, which could be met by a single person in the family.

So what does all of this mean? If we think about the average diabetic who incurs over $20,000 per year in medical costs, they’re likely paying their full deductible and out of pocket maximum in addition to their premium, which would be approximately $1,136 (premiums paid out of your paycheck) + $4,355 (average out of pocket maximum, including deductible) = $5,491. This could be upwards of $8,500 or higher if you have higher out of pocket maximums, which isn’t uncommon. And that’s your annual spending as someone who has insurance!

There was a study published in the British Medical Journal in 2013 (so it’s a little dated), which found that the cost of the healthiest diet was $1.48 more expensive per day than the least healthy diets. Even if we assume significant inflation over the last 10 years and assume this has increased to $2.50 per day, that equates to $912 per year to eat the healthiest diet compared with the least healthy. I realize I’m an actuary and deal with numbers every day, but I think we can all agree that $912 is less than the $5,491 number above, and well below the $20,000 total cost per year for those with diabetes.

Taking this one step further, obviously we would assume that whether you have diabetes or not, you would still pay the premiums for health insurance, so that $1,136 for a high deductible plan is a sunk cost. You may also have some physician visits and prescriptions outside of your preventive care, so perhaps you end up with $1,000 in health care costs you have to cover through your deductible in a year. Add in the additional cost of a healthy diet, and that’s still nearly $2,500 per year less than covering the medical costs associated with a diabetes diagnosis. 

This number can vary greatly, which I want to stress, but this gives you an idea of the real, hard, savings you could have just by eating healthy. That’s significant savings over your lifetime; if I think about someone my age, 38, and the savings from now until I hit age 65 (because things get a little squirrely when we bring in Medicare, but there would still be significant savings past age 65) would be nearly $150,000, assuming a 5% growth in savings per year due to medical inflation. This is a very conservative estimate, and for a country where we struggle to save for retirement, that’s an incredibly significant sum of money that could be going to retirement or improving your quality of life.

I haven’t even touched on the other benefits of a healthy diet, including the impact on the environment, mental health benefits, improved quality of life and longevity, avoidance of additional chronic conditions, etc. But my point is that there are real, hard savings to eating healthy.