Financial Burden of Dementia in the United States

A large and growing population of Americans are being diagnosed with dementia, a chronic disease of aging characterized by progressive cognitive decline that interferes with independent functioning. In January 2011, President Barack Obama signed into law the National Alzheimer’s Project Act that will allow the federal government to track the monetary costs incurred by individuals and Medicaid and Medicare as a result of dementia.

According to researchers, it is difficult to accurately identify the monetary costs directly associated with dementia because persons with the disease tend to be older and have more coexisting chronic conditions than those without dementia. Certain diseases such as stroke and depression are also more common in persons with dementia than in those without dementia. An accurate accounting of the costs of dementia alone should adjust for the presence of those coexisting conditions, the researchers noted.

In addition, an important component of the support required by persons with dementia is provided by informal caregiving (the unpaid care provided by family and friends) and it is unclear how to assign a monetary value to an informal caregiver’s time.

In light of the aging of the US population and the rise in the prevalence of dementia as well as the federal government’s focus on the development of a plan to address the increasing effects of dementia, the researchers recently conducted a study to determine the monetary costs associated with dementia, utilizing data from the Health and Retirement Study (HRS). Results were reported in the New England Journal of Medicine [2013;368(14):1326-1334].

The researchers identified the presence of dementia in a subsample of the HRS population (n=856) with the use of a detailed in-home cognitive assessment that was 3 to 4 hours in duration; the assessment was part of the Aging, Demographics, and Memory Study. The researchers then identified persons in the larger sample with a high probability of dementia by attributing cognitive status to the full HRS sample (n=10,903 persons; 31,936 person-years) on the basis of measures of cognitive and functional status available in the larger database.

Market costs were determined based on self-reported out-of-pocket spending and utilization of nursing home care. Informal caregiving was valued as the cost of paid equivalent care or as the estimated wages forgone by the caregivers. Medicare claims data were used to determine costs paid by Medicare.

Dementia was associated with a cost of $33,329 for care purchased in the market (95% confidence interval [CI], $24,223-$42,434). The cost indicated that a person with a probability of dementia of 1.0 would be expected to incur $33,329 more in healthcare costs than someone whose probability of dementia was 0, when costs were aggregated over all payers. After adjusting for coexisting conditions and demographic characteristics, the cost estimate was $28,501 (95% CI, $20,881-$36,122), a 14% reduction.

The monetary value of informal home care associated with dementia did not vary when controlled for coexisting conditions and demographics; however, it varied by a factor of >2 when estimated using replacement costs as compared with the cost of forgone wages.

After adjustment for coexisting conditions and demographic characteristics, the yearly cost per person, including the cost of care purchased in the marketplace and the cost of informal care, was $41,689 when forgone wages were used in the calculation and $56,290 when the replacement costs were used.

The rate of dementia in persons >70 years of age in the United States in 2010 was 14.7%. The annual population cost attributable to dementia was $109 billion for care purchased in the market, and $159 billion to $215 billion when the estimated monetary value of informal care was included. Medicare paid approximately $11 billion of this cost.

The researchers estimated that, assuming prevalence rates and cost per person with dementia remain the same, by 2040 the costs of dementia will more than double.

“Dementia represents a substantial financial burden on society, one that is similar to the financial burden of heart disease and cancer,” they added.