Understanding the Escalating Costs of Alzheimer Disease

As the number of people living with Alzheimer disease and related dementias soars in the years ahead, so too will the related health care costs. Experts highlight the biggest challenges of controlling these expenses and explore possible strategies.

Dementia is already one of the most expensive conditions faced by the US health care system and American population, and over the course of the next two decades the number of people living with Alzheimer disease and related dementias (ADRD) is expected to nearly double.

For 2019 alone, the direct costs for ADRD are estimated at nearly $300 billion across Medicare, Medicaid, private insurance, and out-of-pocket expenses for those living with dementia. Without a treatment, this figure is expected to balloon to over $1 trillion by 2050, according to a report published October 29, 2019 by The Milken Institute—a nonprofit, nonpartisan think tank.

Given that there are still no effective pharmaceutical treatments for preventing, delaying, or reversing cognitive decline, the most significant challenges stem from the hefty and oftentimes prolonged costs of managing ADRD, explained Kim E Innes, MSPH, PhD, a professor in the department of epidemiology, West Virginia University School of Public Health.

Informal Care Takes a Toll

Dementia increases overall health costs and out-of-pocket expenses for those living with the condition and for their caregivers. Direct costs include home health care and long-term care services. During the later stages of the disease, individuals often require around-the-clock care provided by nursing homes or memory care centers. 

Traditional health insurance plans and Medicare provide little or no coverage for in-home or facility-based care for those with ADRD, at least over the long-term, noted David Prescott, PhD, associate professor and coordinator of the health administration and public health program at Husson University, Bangor, ME. 

It is estimated that fewer than 1 in 10 elderly Americans have long-term care insurance, Dr Prescott explained, and people often pay out-of-pocket for much of the long-term care required for a family member suffering from dementia. He added, if financial reserves are exhausted while paying for ADRD, they may become eligible for Medicaid, which in many states does pay for long-term care.

This dynamic means that individuals with ADRD often wind up receiving informal, unpaid care from family members and other caregivers as the disease progresses. Memory‐related conditions usually require more demanding care and longer hours than other forms of caregiving, which can lead to physical and emotional stress, depression, and other adverse health outcomes. 

The difficulty of juggling caregiving and work responsibilities can also lead to reduced productivity, absenteeism, or job departure. 

The Milken Institute projections indicate that the number of people who will have to leave their jobs because of the strain of caregiving will more than double over the next two decades, and according to the AARP Public Policy Institute, family members who leave the workforce to care for a parent lose, on average, over $300,000 in wages and benefits over their lifetime.

Delayed Diagnosis Leads to Low-Value Care

A significant number of older adults with dementia go unrecognized and undiagnosed by their primary care teams, noted Wayne Saltsman, MD, PhD, a geriatrician and hospice and palliative care physician. The disease is often diagnosed late in its course when a living situation has become unstable, home environments have become less safe, medications are less effective, and caregivers are already burned out.

Together, these issues can lead to higher utilization of primary physician resources, emergency department visits, and acute care stays as well as demands for long-term care placement or urgent neurology appointments that cannot be made available. “By not assessing older adults for dementia earlier, the natural course becomes costly, low-value care,” added Dr Saltsman, who is the medical director of senior care options at Commonwealth Care Alliance, a not-for-profit health care organization in Massachusetts. 

The health care system would benefit from a standardized method of early assessment and diagnosis for ADRD, he noted. And because there is a shortage of geriatricians in the United States and neurology offices are often overwhelmed, Dr Saltsman believes all care providers should be trained to assess and recognize cognitive impairment early on and to manage the condition once diagnosed. 

Cost-Conscious Interventions

With no effective treatments for ADRD in sight, research and clinical efforts are shifting to prevention and early intervention, which could be a means of reducing health care costs while the search for a cure continues. 

A group at the University of Southern California’s Schaeffer Center for Health Policy and Economics projected, for example, that delaying the onset of Alzheimer disease by 5 years would reduce health care payments by 39% in the year 2050. 

“Health policy experts and care providers acknowledge that controlling costs for dementia care and long-term care, in general, is a challenge,” Dr Prescott acknowledged. Still, because in-home care is often less costly than facility-based care like nursing homes, some providers are attempting to develop environmental modifications that allow for safer at-home care. 

Another cost-conscious strategy is “to ensure that people with dementia do not develop additional health problems,” he explained, noting that those with dementia may struggle to communicate that they have a health-related concern. Caregivers are increasingly developing strategies to quickly identify and address health issues that become serious if left untreated.

Growth of Medicare Advantage

There has been dramatic growth, due in part to the ACA and other market factors, in the Medicare Advantage program, Paul Fishman, PhD, a professor in the department of health services at the University of Washington pointed out. Whereas the percentage of the eligible Medicare population enrolled in a managed care plan used to hover between about 10% and 17%, he said that figure has since climbed to over 30% and will likely continue to rise.

Because of the rapid growth in the number of seniors and the increased prevalence of ADRD, Dr Fishman said managed care needs to be prepared for an older population with complex medical needs, including ADRD. From his vantage point, some of the more forward-thinking plans are working to incorporate the full team into the patient care model. They are considering how to engage family members, front office staff members, and mid-level clinical professionals like social workers and community health workers. 

The goal is to deal with the issues that might show up in a clinical setting but are better addressed elsewhere. Managed care leaders and decision-makers are well-suited to address this, according to Dr Fishman, “because if their focus is managing a fixed budget, then their challenge is to find the least expensive way to provide that care.” 

Moving forward, Medicare Advantage is going to have a higher risk adjustment category for dementia, according to Nora Super, senior director of The Milken Institute Center for the Future of Aging. “We think that this is going to really increase the number of diagnoses because the Medicare Advantage plans can get higher payment for that,” she said during a December 18, 2019 webcast moderated by the Association of Health Care Journalists.

There is also hope that this will lead to the development of improved models of care that work better than high-cost hospitalizations and emergency room visits. “There are some lower-cost solutions that are really a win-win in terms of lowering cost as well as having a more pleasing environment for the patient and the caregiver,” Ms Super said. 

One little known notion is that a significant number of people with Alzheimer disease actually live alone, she said, and there has been a slight change to Medicare Advantage to allow some supplemental benefits. Meals can be delivered to homes and people can utilize transportation services, for instance, which she said “will be a tremendous help to people with Alzheimer [disease].”