Expert Discusses High Economic Costs of Dementia

Dementia directly costs the U.S. economy upwards of $100 billion a year, more than cancer or heart disease. Add the cost of "informal care," including earnings people forgo to look after suffering relatives, and the overall cost is even higher, said Michael Hurd, an economist and director of the RAND Corporation's Center for the Study of Aging.

Speaking at the Federal Reserve Bank of Atlanta's October 21 Public Affairs Forum, Hurd added that as the country ages, dementia is likely to become more widespread and thus more expensive. Hurd was lead author of a groundbreaking 2013 study on the monetary cost of dementia in the United States. He defines the condition as a "serious loss of cognitive ability in a previously unimpaired person, beyond what might be expected from normal aging, leading to disability."

As population ages, more cases of dementia likely
America is graying fast. In the next 30 years, the portion of the U.S. population 85 and older will rise from 2 percent to above 4 percent. The share of Americans 65 and older is projected to climb from 15 percent now to nearly 25 percent by 2060, Hurd said.

Because dementia is strongly age-related, as the country's population gets older, it figures that more and more people will contract it, he said. The prevalence of dementia nearly doubles with every five years a person ages, according to Hurd. For example, dementia afflicts about 10 percent of people 75 to 79 years old, 20 percent of 80– to 84-year-olds, 35 percent of those aged 85 to 89, and more than 50 percent of people 90 and older, Hurd's research shows.

Hurd wrote the 2013 paper along with four other economists and scientists. They arrived at a monetary cost of dementia that includes out-of-pocket spending by households, Medicare and Medicaid spending, and private insurance expenditures. The bulk of dementia costs consists of institutional and home-based long-term care, and not medical services, Hurd said, since dementia sufferers typically require round-the-clock attention.

Hurd and his collaborators pegged the total monetary cost at about $109 billion for the year 2010. Add the estimated costs for informal caregivers' time—or, alternatively, the cost to replace that time with hours of formal care in the marketplace—and the 2010 cost for dementia totaled $159 billion to $215 billion, Hurd and his collaborators calculated. By 2020, the direct monetary cost is estimated to rise to $129 billion, while the wider cost could reach roughly $189 billion to $255 billion.

Big differences by education level
One potential deterrent to dementia is education, Hurd and his fellow researchers found. People with a bachelor's degree or higher are substantially less likely to contract the disease than those with less schooling. In the 80 to 84 age group, for instance, dementia strikes more than a quarter of those who lack a high school diploma but fewer than 15 percent of those with a bachelor's degree or higher.

The causes of that disparity are unclear, Hurd pointed out. In particular, it is not known whether the difference in the incidence of dementia is because people who pursue more education tend to have more resilient brains to start with, or because increased education conditions their brains to resist dementia.

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