Cost and Caring: Policy Challenges of Alzheimer's Disease

By Fox, Patrick J.; Max, Wendy B. | Generations, Spring 2009 | Go to article overview

Cost and Caring: Policy Challenges of Alzheimer's Disease


Fox, Patrick J., Max, Wendy B., Generations


A surprising analysis with varying implications for society, caregivers, and the person with dementia.

Old age is a period of the human life cycle that is generally devalued in American society, and the image of Alzheimer's disease contributes to the fear of aging and stigmatization of elders that is prevalent (Beard and Fox, 2008). Indeed, partly as a result of advocacy efforts that have emphasized the substantial cost of Alzheimer's disease to society as a way of garnering support for policy development, dominant societal images of the disease are generally of an illness that dehumanizes its victims and wreaks havoc financially as well as emotionally on their families. This overwhelmingly negative portrayal is reinforced by messages in the media and public policy discourse bemoaning the increasing numbers of elders who will develop Alzheimer's disease and the associated rise in the costs to society as a result (Fox, Kelly, and Tobin, 1999).

It is clear that Alzheimer's disease imposes both emotional and economic burdens on those who are afflicted, their families, the professionals who care for them, and society. In the United States today, it is estimated that over 5 million people have the disease, and this number is projected to increase to anywhere from 11 million to 16 million by 2050 (Alzheimer's Association, 2008, 2009). Thus, costs associated with the disease are likely to increase as well.

The economic cost of Alzheimer's disease to society includes the value of all goods and services that are used to prevent, diagnose, treat, and care for people with the illness. Direct costs, those that result in dollar expenditures, include physician services, hospital care, nursing home care, medications, adult daycare, homemaker services, respite care, transportation services, and many additional social and other services. People living with Alzheimer's disease and other dementias are more likely to use inpatient hospital services and are more likely to see a physician than are Medicare beneficiaries without Alzheimer's disease. As such, the average Medicare cost per beneficiary is three times higher for someone with Alzheimer's disease than for someone without it. People with dementia represent approximately one-quarter of older users of paid homecare services, and about one-half of users of adult daycare, residential care, and skilled nursing facility care (Alzheimer's Association, 2008).

Alzheimer's disease also leads to indirect costs, which do not involve expenditures but do result in use of resources. Values must be imputed, for example, by estimating wages that would have been paid if caregivers who provide unpaid services had not been available. The indirect costs of Alzheimer's disease include the value of days of productive activity that the person with the disease has lost, the value of unpaid informal caregiver services provided by family members and friends, and the costs in physical and emo- tional suffering experienced by people living with Alzheimer's disease and their families- although the latter costs are rarely, if ever, estimated. The cost of research relating to the diagnosis, treatment, causes, and course of Alzheimer's disease and the cost of educating people about it are also costs to society. As a general indication of those types of costs, the National Institutes of Health spends roughly two-thirds of a billion dollars annually on Alzheimer's-related research (estimated for the years 2004-08) (www.nih.gov/news/fixnding researchareas.htm [accessed October 20, 2008]). Further, it has been estimated that the research and development costs to bring a drug to market are approximately $800 million and that a drug needs to generate $500 million in annual sales to be considered profitable (Rawlins, 2004).

It is challenging to estimate the cost of Alzheimer's disease for a number of reasons. These include the difficulty diagnosing the disease and distinguishing it from other forms of dementia; the difficulty identifying people with Alzheimer's disease in administrative- claims databases (Newcomer et al, 1999); the multiple settings in which people living with Alzheimer's disease may be cared for; the different types of services used by those with mild, moderate, and severe dementia; and the myriad of payers who differ in terms of the services they cover and the settings in which they will cover them.

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