The Costs of Alzheimer’s Disease

Alzheimer’s disease affects 5.3 million people in the United States, and it is the 7th leading cause of death.  In Wisconsin alone, 110,000 people currently live with Alzheimer’s.  Despite its prevalence, effective treatments and cures have yet to be found.  Due to the lack of therapies, those diagnosed with the disease often require long-term care, and Alzheimer’s care is a significant cost for patients, the state, and the country.

While older Americans make up about 12 percent of the population, they account for 90 percent of nursing home residents.  In 2010, Alzheimer’s costs reached $172 billion dollars.  Additionally, there are an estimated 10.9 million unpaid caregivers in the US providing around 12.5 billion hours of care.  This contribution was valued at almost $144 billion, $2.6 billion in Wisconsin alone.

Long-term care and other Alzheimer’s costs are paid by a variety of sources including Medicare and Medicaid.  In 2004, Medicare costs per Alzheimer’s patient ($15,145) were almost three times higher than costs for other Medicare recipients of the same age ($5,272).  That same year, 28 percent of Medicare recipients aged 65 or older also received Medicaid benefits.  Medicaid payments per Alzheimer’s patient ($6,605) were more than nine times higher than payments for other elderly people of the same age ($718).

Although Medicare, Medicaid, and other funding sources provide support for much of Alzheimer’s care, patients and families still must pay high out-of-pocket costs.  These costs include premiums, co-payments, and services that are not covered by other sources.  In 2004, out-of-pockets costs for Medicare recipients with Alzheimer’s averaged $2,464.  Average out-of-pocket costs for patients living in nursing homes or assisted living facilities were significantly higher at $16,689.

Another cost accrued by Alzheimer’s patients is hospice care.  The average length of stay for hospice patients with a diagnosis of Alzheimer’s was 105 days in 2008.  Total payments for hospice care from all sources totaled $2.8 billion in 2004 with per person payments averaging $976 (compared to $120 per person for patients without Alzheimer’s).

Because the costs of Alzheimer’s care is so high, and because the aging of the baby boomer generation is expected to greatly increase the number of Alzheimer’s patients, strategies for decreasing Alzheimer’s care costs is necessary.  This decrease could be achieved by shortening the disease course through earlier detection of the disease and more effective treatments.  With these improvements, treatments would slow cognitive decline, delay the age at which the disease appears, and increase the years that Alzheimer’s patients can remain at home.

In a 2009 paper, two Wisconsin researchers addressed this issue and calculated the potential cost savings if early detection and treatment of Alzheimer’s were possible.  Using a statistical analysis, the authors found that early detection and effective treatment of a 70-year-old woman with mild cognitive impairment would lead to $5,000 in state savings and  $10,000 in federal savings.  When a program of caregiver support was added to early detection and treatment, the analysis yielded even higher savings.  The authors stated that, by their calculations, the state savings were higher than the cost of implementing an early diagnosis program.  Therefore, if the state paid all costs of implementing an early detection and caregiver intervention program not covered by federal funds, the state would still save approximately $10,000 per diagnosed patient.

Currently, there is little incentive for caregiver support.  This paper concludes that the lack of support for family and friends is fiscally irresponsible.  With the development of caregiver support programs, patients could remain out of nursing home care for a longer period of time, thus significantly decreasing long-term care costs.

The high costs of Alzheimer’s care will continue to rise as people live longer and baby boomers approach the age at which Alzheimer’s is diagnosed.  In addition to the impact on Medicare and Medicaid spending, out-of-pocket costs put another stress on patients and caregivers.  With the current economic climate across the country, cuts in support for Alzheimer’s care may become necessary.

However, many studies are now focusing on the ability to detect and treat Alzheimer’s early, before cognitive decline can be measured.  Through earlier detection, more effective treatment, and additional support for caregivers, the costs of Alzheimer’s care for the state, the country, and families would decline.  Such a program would also provide hope and reassurance to those affected by a disease currently surrounded by uncertainty.

Data for this post provided by the Alzheimer’s Association.


8 responses to “The Costs of Alzheimer’s Disease

  1. I’m glad you tackled this, Caroline — it really puts things in perspective for those with no experience with the disease.

    This may seem off topic, but I’m curious to ask whether you’ve encountered an increased interest in palliative care for Alzheimer’s patients. Would these alternatives affect the cost of treatment for this disease? I know very little about this, so thanks in advance for sharing!

    • Thanks for the post, Marianne.

      The area of palliative care and Alzheimer’s hasn’t been extensively studied from what I’ve found. One of the problems with current Alzheimer’s treatments is they rarely work for an extended period of time at which point the caregivers have to decide how to proceed. I think increased palliative care could be extremely beneficial – especially for the family and friends of the patient as the deal with the later stages of the disease. My grandmother was given palliative care near the end of her life, and I think that was a great relief to her and my family as the hope of effective treatment diminished. I don’t know really know the costs of this type of care, and it would be interesting to add this into a budget analysis – perhaps it could be a part of the caregiver support programs?

  2. Really nice analysis. Always nice to see numbers attached to arguments. The benefits, both financial and (importantly) as far as patient care and comfort, of expanding and improving early detection and caregiver support, seem to be a rising theme in studying many diseases. Hopefully this trend continues.

  3. No one ever wants to think of their loved ones as a burden, but the costs associated with care for Alzheimer’s patients can be crippling – especially when the person with Alzheimer’s needs round the clock care or lives in a nursing home or assisted living facility. This post really puts the costs into perspective, well done!

  4. Very eye-opening, Caroline! The increased life expectancy of people certainly adds an important consideration for health care reform and how to plan for the increased costs.

  5. Very smart post, Caroline, with information that everyone should have at hand.

  6. Thanks for useful and informative article. Can you point readers to a reference on the Medicare & Medicaid numbers you quote: “In 2004, Medicare costs per Alzheimer’s patient ($15,145) were almost three times higher than costs for other Medicare recipients of the same age ($5,272). That same year, 28 percent of Medicare recipients aged 65 or older also received Medicaid benefits. Medicaid payments per Alzheimer’s patient ($6,605) were more than nine times higher than payments for other elderly people of the same age ($718).”

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