Monetary costs of dementia in the United States


Dementia is defined as a decline in cognitive functioning to the point where it significantly affects daily life; it is not a disease but instead a group of symptoms, such as memory loss and confusion. The most common form of dementia is Alzheimer’s disease, which accounts for 60-80% of cases. It is currently the sixth-leading cause of death in the United States, and 1 in every 3 seniors dies with the disease or some other form of dementia.

More than 5 million Americans suffer from Alzheimer’s, and the annual cost of the disease is $203 billion, as estimated by the Alzheimer’s Association. Further, this cost is expected to grow substantially over time — if no substantial medical advances are made — to an estimated $1.2 trillion in 2050.

AlzheimersAssociationDespite the serious policy implications for the health care system — 14.7% of Americans over 70 suffer from dementia — it has been difficult to derive a complete cost picture of dementia, including Alzheimer’s. According to a 2013 study published in The New England Journal of Medicine, there are several reasons for this difficulty. First, individuals who are afflicted with dementia have a higher likelihood of having other diseases, such as heart disease, therefore making the cost from the dementia alone harder to disaggregate. Second, it is challenging to calculate the amount spent on home healthcare providers because this information is often self-reported. Finally, it is difficult to measure the cost of the hours of informal and unpaid care that individuals with dementia receive. Still, there have been several attempts to measure the full economic cost of dementia globally and make projections about its future cost.

The New England Journal of Medicine study, titled “Monetary Costs of Dementia in the United States” — the most comprehensive of its kind yet done by researchers — examines a sample of 856 individuals from the Health and Retirement Study, a national longitudinal study of adults over age 51, and performs diagnostic testing for dementia on these individuals in order to measure rate of prevalence of dementia. In addition, the researchers utilize Medicare claims data, and self-reported data on out-of-pocket spending and informal unpaid care, from each of the participants to estimate the economic cost to them, adjusting for other existing conditions and demographic characteristics. The researchers are from the RAND Corporation, the National Bureau of Economic Research, the Network for Studies on Pensions, Aging, and Retirement (Tilburg, the Netherlands), the University of Essex and the University of Michigan.

The study’s findings include:

  • The authors estimate that “dementia leads to total annual societal cost of $41,000 to $56,000 per case, with a total cost of $157 billion to $215 billion nationwide in 2010.” In addition, they estimate the total cost of health care purchased to have been $109 billion in 2010.
  • The authors expect the cost of dementia to increase substantially in the United States, as a result of a rapidly aging population, with “an increase of nearly 80% in societal costs per adult by 2040.”
  • Individuals who were nonwhite experienced a significantly higher prevalence of dementia compared to whites; the prevalence was 9.7% for whites; 16.8% for Hispanics; and 18.4% for all other races. Women had a higher prevalence of dementia than men, with a rate of 12.1% for women and 8.8% for men.
  • Individuals who were unmarried experienced higher rates of dementia than those who were married, with a rate of 6.5% for those married and 14.5% for those unmarried.
  • The prevalence of dementia rises substantially with increasing age. Among individuals ages 71-74, there is a prevalence of dementia of 2.8%; among those ages 80-84 there was a 13% prevalence; and the rate rises substantially, to 38.5%, among individuals over 90.
  • Dementia was also more prevalent in individuals who had less education: College graduates having a much lower prevalence (6.6%) than high school graduates (10.3%) and those who didn’t graduate from high school (15.9%).
  • Prevalence of dementia is significantly correlated with income, with the highest prevalence (18.3%) among those making less than $15,000 annually, and the lowest (4.1%) among those making more than $75,000 annually.
  • The estimated total out-of-pocket spending for each participant was $6,194. Medicare spending was $2,752 annually, after adjusting for demographic characteristics and coexisting conditions. The total amount spent on formal homecare for each participant was $5,678, after the same demographic and coexisting condition adjustments were made. Nursing home care represented the largest amount of the cost attributed to dementia for each participant, with $13,876 annually being spent.
  • The authors note that “the main component of the costs attributable to dementia is the cost for institutional and home-based long term care rather than the cost of medical services … the sum of cost for nursing home care and formal and informal home care represent 75% to 84% of attributable costs.”

The authors note that these findings are “considerably smaller than those reported by the Alzheimer’s Association, which has estimated that in 2010 the monetary costs alone were $172 billion … as compared with our estimate of $109 billion.” The study suggests that the Alzheimer’s Association used “a sample from a more severely impaired population,” which will subsequently pay more for care. In addition, the Alzheimer’s Association did not account for coexisting conditions, which significantly inflated the costs associated with dementia.

Tags: aging, senior citizens, mental health, retirement

Last updated: June 21, 2013


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Citation: Hurd, Michael, et al. “Monetary Costs of Dementia in the United States,” The New England Journal of Medicine, April 2013, Vol. 368, No. 14, 1326-1334. doi: 10.1056/NEJMsa1204629.