Alzheimer's Impact on the US Health System
Updated: Mar 8
In 2019, it’s estimated that the total direct costs to Americans to care for people living with Alzheimer’s and other forms of dementia were in the neighborhood of $290 billion, not including the countless unpaid caregiving loved ones provide. Of this total, $63 billion was paid out-of-pocket by caregivers. About $150 billion came from the federal government under Medicare, one-fifth of total Medicare spending. Another $50 billion will come from the federal and state governments in the form of Medicaid. Today, an estimated 5.6 million Americans over the age of 65 are living with Alzheimer’s. This number is expected to triple by 2050, and it is expected that one million new cases per year will be developing by this time. Combined Medicare and Medicaid spending on people with Alzheimer’s will cover $770 billion (in 2019 dollars) of the trillion-dollar-plus total that will be needed to cover the direct costs of treating the disease. By this point, Alzheimer’s will suck up one in every three Medicare dollars. If this becomes a reality, Medicare and Medicaid could potentially collapse, leaving millions of Americans without the healthcare system they rely on. Year after year, the Alzheimer’s Association of America continues to plead with Congress, letting them know that this disease alone has the potential to single-handedly bankrupt Medicare, but no progress ever seems to be made.
Medicare costs for a person with Alzheimer’s are triple the costs for someone without Alzheimer’s. Additionally, Alzheimer’s complicates the treatment of other chronic conditions. For example, someone who has both Alzheimer’s and diabetes costs 80% more than someone who only has diabetes. Average per-person spending under Medicaid for a person with Alzheimer’s is 23 times higher than a person without. People living with Alzheimer's or other Dementia's have twice as many hospital stays per year as other older people and more skilled nursing facility stays and home health care visits per year than other older people. A large proportion of all elderly people who receive adult day services and nursing home care also have Alzheimer’s.
It’s not only public health programs that are feeling the weight of this disease. Alzheimer’s costs American businesses a total of over $60 billion per year. About $25 billion of this comes from direct costs associated with Alzheimer’s, such as providing health care to employees and their families, and the remainder comes from indirect costs such as lost productivity and absenteeism related to employees providing care for their loved ones with Alzheimer’s. Unsurprisingly, many employees who double as unpaid caregivers end up leaving their jobs altogether. Turnover also has very high direct and indirect costs for a company. Not only does the company have to cover the costs of the old employee leaving the company, but they will also have to pay to on board and train a new person to fill the role, and they take a hit in operational efficiency from losing an experienced employee who knows the company and their processes inside and out. To remain in business, companies will have no choice but to pass these costs on to their customers by raising prices.
How do we reduce this? By Identifying Alzheimer's disease early, we could save the United States as much as $7.9 trillion in health and long-term care costs. Currently, Alzheimer’s is not diagnosed until a person begins showing symptoms. This is the equivalent of waiting until someone has had a heart attack to let them know that they need to lower their cholesterol. Prevention is the key to successfully treating the disease. It makes no sense to wait until someone’s brain has degenerated to the point of dementia before beginning treatment. Despite this, every $31,000 Medicare and Medicaid spend caring for individuals with Alzheimer’s is matched by the National Institutes of Health (NIH) with only $100 on Alzheimer’s research. Alzheimer’s is the only leading cause of death that is not preventable, but research for the disease will only receive $580 million from the NIH this year. This number may seem large, but comparing it with another devastating disease, like cancer, that is receiving $5 billion puts into perspective that not enough is being done. No new Alzheimer’s drugs have been approved by the FDA since the early 2000s, and US deaths from Alzheimer's have doubled in the last 15 years while deaths from other major diseases have been consistently declining. The reason that deaths from other diseases have declined is because of significant investments in research that produce treatments, techniques to reduce risk, and even cures. The primary thing holding back these advancements in the Alzheimer’s space is primarily funding. According to Rudy Tanzi, a Harvard professor of neurology and the head of MassGeneral's Genetics and Aging Research Unit, "We are a knowledge-rich yet budget-constrained field. We have many clues about how to stop Alzheimer's, especially from recent genetic studies, but insufficient funds to explore how."
The amount of money that is being taken out of consumers’ pockets to care for their loved ones has clear implications on the demand side of the economy now and the reduction in saving will cause these implications to continue, and even worsen, in the future. One could argue that Medicare and Medicaid are already failing Alzheimer’s caregivers, but there is little question that these programs in their current state are not equipped to protect tomorrow’s caregivers as over 70 million baby boomers continue to hit the prime years for developing Alzheimer’s and direct costs of fighting the disease race towards $1 trillion per year. More and more caregivers will continue to work less or quit working altogether, compounding the additional out-of-pocket costs that Americans will need to cover. Without programs in place that will prevent this disease from stealing every dollar out of the pocket of caregivers, and every hour of employee productivity from companies, there will be serious consequences on the American economy and health system.