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U.S. Dementia costs to exceed $780 billion this year

A new dementia cost project from USC provides updated estimates of the financial toll on patients, care partners and society

University of Southern California

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U.S. dementia costs this year will total $781 billion, according to a new cost model from USC.

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Credit: USC Schaeffer Center

The total economic burden of Alzheimer’s disease and related dementias in the United States will reach $781 billion this year, according to new USC-led research.

This is the first of what will be annual national estimates from the multidisciplinary research team. The team aims to provide the most comprehensive accounting yet of dementia’s growing economic toll. Beyond the cost of care, the model also accounts for lost earnings from patients and care partners who cut back work hours or leave jobs, as well as the diminished quality of life experienced by millions of patients and their families, among other factors.  

“Having a better understanding of who bears these costs and how they change over time can inform evidence-based policies that may ultimately reduce the financial impact of dementia,” said Julie Zissimopoulos, co-director of the Aging and Cognition program at the USC Schaeffer Center for Health Policy & Economics and professor at the USC Price School of Public Policy, who is principal investigator of the U.S. Cost of Dementia project.

Funded by a multi-year cooperative agreement from the National Institute on Aging (which is part of the National Institutes of Health), the project leverages data from several large, nationally representative surveys, including from the Health and Retirement Study and administrative health data from the Centers for Medicare and Medicaid Services. The researchers estimate costs to patients, care partners and the healthcare system using dynamic microsimulation — a powerful tool for understanding how changes in treatment, care and policy will impact costs of dementia over time. 

An estimated 5.6 million Americans are living with dementia this year, including 5 million who are 65 and older, according to the researchers. Medical and long-term care for patients with dementia will cost the United States $232 billion this year, including $52 billion paid out of pocket by patients and their families. More than two-thirds of the total cost of care is paid for by Medicare ($106 billion) and Medicaid ($58 billion).

Dementia’s societal costs are even more staggering, the model reveals. The largest share stems from a factor often not measured in other cost estimates: The significant decline in quality of life for patients ($302 billion) and care partners ($6 billion). Lost earnings among friends and family who forego work to provide care — another measure often not captured by other estimates — total $8.2 billion. Care partners provide 6.8 billion hours of unpaid care, valued at $233 billion.

“This research demonstrates the enormous toll dementia places on patients, their families and care partners. But it also points to the potential value of developing ways to prevent and treat Alzheimer's and related diseases that cause dementia,” said Dana Goldman, founding director of the USC Schaeffer Institute for Public Policy & Government Service and co-principal investigator on the project.

An ongoing look at dementia’s changing costs

The clinical resources available to tackle dementia are rapidly changing. New treatments slow cognitive decline in some patients with early-stage Alzheimer’s, and new blood tests are enabling early detection of Alzheimer's.

The USC-led research team is building tools to help researchers and policymakers understand how these and future evolutions in dementia care, prevention and policies can affect costs for patients, the healthcare system and society. This information will support stakeholders in making decisions about priorities and the allocation of resources for reducing the costs of dementia.

To draw on a wide range of perspectives, the research team includes prominent experts across disciplines at USC — including the Schaeffer Center, the Price School of Public Policy, the Mann School of Pharmacy and Pharmaceutical Sciences, the Davis School of Gerontology and the Viterbi School of Engineering — as well as the Alzheimer’s Association and the University of Pennsylvania. Researchers from other institutions provide additional guidance, and patients and care partners are regularly consulted to ensure the cost model reflects real-world experience. 

Going forward, the project will seek to uncover all types of costs to provide the most comprehensive estimates of the national cost of dementia to date.

The U.S. Cost of Dementia Project is funded by a cooperative agreement with the National Institute on Aging, part of the National Institutes of Health (#U01AG086827).

More than two-thirds of the total cost of dementia care is paid for by Medicare and Medicaid. 

Credit

USC Schaeffer Center

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Article Publication Date

23-Apr-2025

Listen to Science

Cesar Chelala

 April 23, 2025
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Illustration by Paola Bilancieri.

Who would have thought that the humble lentil flour (revalenta arabica) would, in the mid-19th century, be advertised as a food of extraordinary restorative power for invalids and sold at many times its cost for this purpose? And this is not even the first documented example of quackery in historical records. Pietro Longhi’s painting The Charlatan (1757) is an even earlier example, showing a man in the act of promoting his suspicious wares.

The term quack is a shortened version of the old term quacksalver, derived from the Dutch: kwakzalver, a “hawker of salve,” somebody who boasted about his salves, also known as ointments. In the Middle Ages, the term quack meant “shouting,” since quacksalvers sold their products at markets by shouting like circus barkers.

Quackery is often described as “health fraud,” and one of its main characteristics is aggressive promotion. Stephen Barrett, the founder of Quackwatch, a website aimed at debunking health-related frauds, myths, and pseudoscientific claims, defines quackery as “the promotion of unsubstantiated methods that lack a scientifically plausible rationale.”

The danger of quackery is that it might cause people to avoid treatments that are likely to help, in favor of ineffective and even harmful treatments.

Enter R.F. Kennedy Jr., the new Secretary of Health and Human Services, some of whose medical ideas could be considered part of the long tradition of quackery in America. In 1984, Kennedy pleaded guilty to a felony charge of possession of heroin in South Dakota, and was sentenced to two years of probation and community service. To satisfy conditions of his probation, he worked as a volunteer for the Natural Resources Defense Council (NRDC), claiming that this ended his 14 years of heroin use.

Later, he defended the environment, advocating for the repeal of legislation that he considered endangered its preservation. In 1987, he founded the Environmental Litigation Clinic at Pace University School of Law. He and the clinic received several awards for their legal work to clean the environment, and were a model for similar environmental law clinics in other parts of the country.

For many years, he carried out significant work for the defense of indigenous people’s rights. He represented CONFENIAE, a confederation of Indian peoples, to limit oil extraction in the Ecuadorian Amazon and defended Amazonian tribes’ right to benefit from resource extraction. He also was a vocal critic of Texaco’s record of polluting the Ecuadorian Amazon.

For a long time, Kennedy claimed that vaccines cause autism. However, several studies conducted in many countries have concluded that there is no link between vaccines and autism. His distrust of vaccines ignores that 14 diseases were nearly eliminated by vaccines, saving millions of people’s lives and improving their quality of life. Although in recent times Kennedy denied that he is anti-vaccines, his record proves otherwise.

Under his tenure, the Health and Human Services Department cut billions of dollars to state health agencies, thus hindering their work and research on childhood immunization. Kennedy also has promoted the use of cod liver oil, a steroid and an antibiotic as treatment for measles. They are not scientifically approved therapies and –rather than curing them– could make children even sicker.

An easy explanation (though easy explanations are not always right) is that the Secretary’s lack of medical training impedes his capacity to analyze medical and scientific data correctly. Although it is true that vaccines can have some adverse side effects, the quantity of those negative results pales in comparison to their positive benefits.

R. F. Kennedy Jr.’s behavior puts the public at considerable risk. That is why his nomination was strongly criticized. In December 2024, more than 75 Nobel Laureates requested that the US Senate oppose Kennedy’s nomination, stating that he “would put the public’s health in jeopardy.”

On January 9, 2025, over 17,000 doctors, members of the Committee to Protect Health Care, signed an open letter urging the Senate to oppose Kennedy’s nomination. In spite of the warnings, he now has the most important health position in the US government.

On April 9, there were massive cuts to programs at the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), and the Health Resources and Services Administration. Georges Benjamin, MD, president of the American Public Health Association (APHA), issued a statement that said concerns raised during Kennedy’s confirmation hearings have been realized.

These considerations are pertinent, as measles cases are now over 700 and have extended from Texas to other states and caused at least two children’s deaths. Those deaths and sickness could have been avoided if the children had been vaccinated.

Although cuts to health care and research continue unabated, there is still time to change direction, follow expert medical advice and take measures to truly improve people’s health.

Dr. Cesar Chelala is a co-winner of the 1979 Overseas Press Club of America award for the article “Missing or Disappeared in Argentina: The Desperate Search for Thousands of Abducted Victims.”

‘Oppressive’ Taxation That Isn’t

Bob Lord

 April 23, 2025Facebook

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Tax Foundation logo – CC BY-SA 4.0

What is the mission of the Washington, D.C.-based Tax Foundation? Even a quick review of the Tax Foundation’s output makes it perfectly plain: to help make average Americans see the richest among us as terribly overtaxed.

Hardly a Tax Foundation report goes by without one iteration or another of this overtaxed claim. Just last fall, the Tax Foundation produced a study that had billionaire Warren Buffett paying taxes at a rate of over 1,000 percent.

A few years back, early in the Biden years, I deconstructed another Tax Foundation claim, that the passage of tax changes the Biden White House was then pushing would leave the estate of a hypothetical taxpayer worth $100 million facing a tax rate of 61.1 percent. My response detailed the absurdity of that claim.

But what if that 61.1 percent had turned out to be an appropriate calculation? Would that 61.1 percent rate have really amounted to an oppressive tax levy? The Tax Foundation sure wants people to think so.

So let’s take a closer look at the Tax Foundation’s mythical ultra-rich taxpayer and let’s tweak the Tax Foundation’s hypothetical facts to make them just realistic enough to work with.

Suppose we assume our mythical taxpayer originally paid $1 million for the asset that ended up worth $100 million at her death 25 years later. That would leave $99 million of taxable gain. And a $1 million asset appreciating to $100 million after 25 years would have an average annual rate of return of 20.23 percent, a realistic rate for the sort of “home run investments” the ultra-rich actually make.

Let’s also ignore the exemption from federal estate tax — currently $14 million per individual, $28 million for a married couple — and treat the entire amount remaining from the $100 million after payment of income tax as subject to a 40 percent estate tax.

Applying the Tax Foundation’s methodology from that point, we would end up with a total effective tax rate just shy of 65.8 percent, nearly five percentage points higherthan the 61.1 percent rate that had our friends at the Tax Foundation clutching their pearls. Wow! Sounds stunningly oppressive, huh?

Actually, no. The reason: The Tax Foundation’s presentation deceptively ignores the tax reduction magic of buy-hold for decades-sell, the tax loophole that causes the effective annual tax rate on the growth in the value of investments to decline as the rate of return and length of the holding period increase.

Our mythical taxpayer would be the quintessential beneficiary of this tax reduction magic. She would see her investment gains compound for 25 years withouobt paying a nickel in income tax, all while her asset’s value was increasing by 20.23 percent per year.

The Tax Foundation, you see, makes quite the fuss over the one-time tax a mythical taxpayer’s estate would pay in the year of her death, but conveniently forgets about the taxpayer’s zero tax rate for the previous 25 years running.

That focus on a once-in-25-years tax payment ignores the full picture. To see that more clearly, consider the impact that a 65.8 percent tax would have on a mythical taxpayer’s overall investment return. At an after-tax annual rate of return of 15.18 percent, an asset with an initial value of $1 million will be worth $34.2 million in 25 years, exactly the amount left of the mythical taxpayer’s $100 million after her estate’s one-time tax payment of $65.8 million. That would be a 25 percent reduction in the pre-tax annual rate of return of 20.23 percent.

In other words, that supposedly onerous 65.8 percent tax at the time of the Tax Foundation’s mythical taxpayer’s death translates to an effective annual tax rate of just 25 percent.

Had the Tax Foundation’s mythical taxpayer been required to pay federal tax, covering both current income tax and future estate tax, at an annual rate of 25 percent on the growth in her investment’s value, and had she sold off just enough of the investment each year to pay the tax, her estate would be left with the same amount in the year of her death as it would have after paying the supposedly oppressive income and estate tax due under the terms of the Biden budget.

So, to review, the Tax Foundation concocted a hypothetical situation to show the proposals in Biden’s budget rated as extreme and oppressive. But even though that hypothetical is so concocted it couldn’t be found in the real-life situations of even the richest Americans, the supposedly oppressive one-time tax rate paid by the Tax Foundation’s mythical taxpayer translates to a modest effective annual tax rate of just 25 percent.

The bottom line: Once we take into account the impact of buy-hold for decades-sell, the tales of horror that apologists for the ultra-rich concoct to advocate against any meaningful tax increases on their deep-pocketed friends turn out to be not at all horrible.

Unless you’re horrified at the prospect of a reformed tax system that prevents the already obscene concentration of American wealth from becoming even worse.

Bob Lord is a veteran tax lawyer who practices and blogs in Phoenix, Arizona. He’s an associate fellow of the Institute for Policy Studies.