OBJECTIVES: Onset of Type 2 diabetes (T2D) can be delayed by lifestyle changes and/or medications. Forecasts predict an epidemic of new cases of T2D as the population ages, and modern lifestyles become increasingly unhealthy. T2D patients have >double mortality rates and higher treatment costs of matched non-diabetics. A model was developed to assess acceptable cost limits for a general population-targeted program aimed at reducing the incidence of T2D by 10%. METHODS: A Markov model simulated the incidence of and increased direct medical costs and mortality associated with T2D. Data were derived from published sources. Costs and life expectancy (LE) calculated (discounted at 3% p.a.). Analyses assessed the maximum costs/person a payer could outlay to achieve a 10% reduction in T2D incidence a) without increasing the healthcare budget, and b) remaining within an attractive incremental cost-effectiveness (ICER)