The impact of diabetes on formal and informal care

Diabetes is one of the most common chronic conditions worldwide. Due to its high prevalence among a growing ageing population, diabetes is likely to affect the demand and costs of long-term care (LTC) services. However, our understanding of this impact is limited. In this paper, we study the effect of diabetes on the utilization of formal and informal care in England. We use data from the English Longitudinal Study of Ageing (ELSA), which uniquely combines information on LTC utilization with information on individual-level genetic predisposition for diabetes, individual-level demographics, and other chronic conditions, as well as parental characteristics. This data allows us to use an instrumental variables approach (IV) drawing from the Mendelian Randomization (MR) literature. We find that diabetes predicts a 8 percent higher probability of using formal care and a 27 percent higher probability of using informal care. Back of the envelope calculations suggest that a 1 percentage point increase in diabetes prevalence is associated with additional annual costs of £85 million for formal care and £122 million for informal care. Our analysis also shows that the increase in demand for LTC due to diabetes can act through the onset of difficulties with (instrumental) activities of daily living.