Research Questions

  1. How prevalent is dementia among Americans age 71 or older?
  2. What is the annual economic cost imposed by dementia?
  3. What are the main components of these costs?
  4. How will those costs increase over time?

BACKGROUND: Dementia affects a large and growing number of older adults in the United States. The monetary costs attributable to dementia are likely to be similarly large and to continue to increase. METHODS: In a subsample (856 persons) of the population in the Health and Retirement Study (HRS), a nationally representative longitudinal study of older adults, the diagnosis of dementia was determined with the use of a detailed in-home cognitive assessment that was 3 to 4 hours in duration and a review by an expert panel. We then imputed cognitive status to the full HRS sample (10,903 persons, 31,936 person-years) on the basis of measures of cognitive and functional status available for all HRS respondents, thereby identifying persons in the larger sample with a high probability of dementia. The market costs associated with care for persons with dementia were determined on the basis of self-reported out-of-pocket spending and the utilization of nursing home care; Medicare claims data were used to identify costs paid by Medicare. Hours of informal (unpaid) care were valued either as the cost of equivalent formal (paid) care or as the estimated wages forgone by informal caregivers. RESULTS: The estimated prevalence of dementia among persons older than 70 years of age in the United States in 2010 was 14.7%. The yearly monetary cost per person that was attributable to dementia was either $56,290 (95% confidence interval [CI], $42,746 to $69,834) or $41,689 (95% CI, $31,017 to $52,362), depending on the method used to value informal care. These individual costs suggest that the total monetary cost of dementia in 2010 was between $157 billion and $215 billion. Medicare paid approximately $11 billion of this cost. CONCLUSIONS: Dementia represents a substantial financial burden on society, one that is similar to the financial burden of heart disease and cancer.

Key Findings

In 2010, more than 14 percent of people in the United States age 71 or older had dementia.

The total economic cost of dementia in 2010 was estimated to be $109 billion for care purchased, and $159 billion to $215 billion when the monetary value of informal care is included.

  • Medicare paid about $11 billion of dementia-related costs.
  • The per-person cost of dementia was $41,689 to $56,290, depending on the method of costing informal care.
  • The main component of dementia costs is institutional and home-based long-term care rather than medical services. The cost of nursing home care plus formal and informal home care constitutes 75 percent to 84 percent of dementia costs.

The study estimated that the total cost will increase by 2040 to as much as $511 billion in inflation-adjusted dollars.

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