Out-of-Pocket Healthcare Costs Double with Dementia Diagnosis

A dementia diagnosis is going to cost you, with new data from the University of Michigan showing that individual personal wealth dropped after a diagnosis while out-of-pocket healthcare costs nearly doubled.

The data, published in JAMA Internal Medicine, showed personal wealth decreasing from around $79,000 at diagnosis to $58,000 two years after. Meanwhile, out-of-pocket healthcare costs soared from $4,000 at diagnosis to $8,000 after a dementia diagnosis.

This is in stark contrast to people of similar age and health status without a dementia diagnosis, the researchers added. The study, which looked at wealth and out-of-pocket healthcare costs for people with and without dementia at two- and eight-year intervals shows just how financially detrimental the condition can be.

“What we’re really seeing here is two very different situations over a relatively short time for very similar families, determined just by a single diagnosis,” Cathleen Connell, PhD, a U-M School of Public Health researcher who worked on the study, said in a statement. “It’s a really striking comparison and may be driven largely by the ‘spend down’ of assets by many families in order to qualify for Medicaid coverage of long-term care in a nursing home.”

The researchers looked at data from the Health and Retirement Study, which examined trends for 2,400 adults who had the onset of dementia and 2,400 adults with similar healthcare and socioeconomic status but no dementia diagnosis. Overall, the former group saw a heightened cost burden following their diagnosis.

Both groups had around the same net worth and out-of-pocket healthcare costs going into the study. However, that net worth dropped while healthcare costs increased for those with a dementia diagnosis. They remained generally unchanged for the group who did not receive a dementia diagnosis.

This trend persisted as time wore on. After eight years, people with dementia saw their wealth drop to an average of $30,500 and had spent twice as much as their peers on healthcare expenses.

The researchers also noted a doubling of Medicaid enrollment among the dementia group after eight years, which can be a proxy for financial distress, they said.

And it’s not just a financial toll that dementia can take; there were also stark differences in how—or from whom—study participants received care. Overall, people with dementia needed more from their family caregivers and from other providers, like nursing home providers, than their peers.

The analysis showed that people with dementia needed three times the support from their family caregivers and were five times more likely to enter a nursing home two years after diagnosis than those without dementia.

Nursing home care, plus other types of care like care from a family caregiver or home healthcare provider, have their costs. Nursing homes are expensive, as are home healthcare providers, while family caregivers usually work without pay, according to HwaJung Choi, PhD, the study’s lead author and a health economist and research associate professor in U-M Medical School’s Department of Internal Medicine.

“What we found regarding unpaid caregiving from family and others is the most striking and persistent care use difference, with 45 hours per month on average for people with dementia, compared with 13 hours for those without, by the end of two years,” Choi, who is also a faculty associate at U-M’s Institute for Social Research, said in a statement. “The difference remains sustained at that level across eight years.”

Having family members without disabilities close by could make all the difference in healthcare utilization, the researchers found. For patients with dementia and without a spouse or child, the odds of living in a nursing home by their eighth year following diagnosis were high—about one in three found themselves in this situation.

Around one in four people with dementia with either a disabled spouse or a child living nearby, or no spouse but a child living nearby, were also likely to live in a nursing home after eight years following a dementia diagnosis.

Living with a spouse, regardless of disability status, or with a spouse and child upon diagnosis helped mitigate the odds a dementia patient would eventually live in a nursing home, the data also showed.

These findings indicated some policies that could help support people living with dementia. For one thing, the team suggested models that keep dementia patients in their home, or at least facilities that are not nursing homes, will be key, but it could leave Medicare shouldering a greater cost burden.

They also gave the nod to programs aimed at supporting family caregivers, who the team observed taking on significant responsibility caring for loved ones with dementia. In 2024, CMS will roll out programs to help clinics give better family education to caregivers, while a pilot unveiled in July 2023 aims to support family caregivers of dementia patients.