
A recent University of Michigan study reveals that receiving a dementia diagnosis has a profound financial impact. Out-of-pocket healthcare costs doubled from an average of $4,000 to $8,000 within eight years of diagnosis. Individuals’ wealth dropped significantly, from about $79,000 to $58,000 two years post-diagnosis. This stark contrast in financial outcomes is in stark contrast to those without dementia. The study emphasizes the need for policies to support dementia patients, such as enabling them to stay in their homes or non-nursing home facilities and offering programs to assist family caregivers.
According to recent research conducted by the University of Michigan, the financial impact of a dementia diagnosis is significant, with out-of-pocket healthcare costs nearly doubling for affected individuals. The study, published in JAMA Internal Medicine, reveals that following a dementia diagnosis, out-of-pocket healthcare expenses increased from an average of $4,000 to approximately $8,000 within eight years.
The data also highlights a substantial decrease in personal wealth among those diagnosed with dementia. Their wealth decreased from approximately $79,000 at the time of diagnosis to $58,000 two years later. This stark contrast in financial outcomes becomes evident when comparing individuals of similar age and health status who do not have a dementia diagnosis.
Cathleen Connell, Ph.D., a researcher from the U-M School of Public Health, commented on the findings, stating, “What we’re seeing here is two very different situations over a relatively short time for very similar families, determined just by a single diagnosis.” She further explained that this disparity may largely be due to families depleting their assets to qualify for Medicaid coverage of long-term care in nursing homes.
The research was based on data from the Health and Retirement Study, which examined the trends of 2,400 adults with dementia onset and 2,400 adults with similar healthcare and socioeconomic statuses but without dementia. Initially, both groups had similar net worth and out-of-pocket healthcare costs, but these factors diverged over time. For those with dementia, net worth declined while healthcare costs increased, whereas those without a dementia diagnosis saw relatively stable financial conditions.
This financial burden persisted as time passed, with individuals with dementia experiencing a drop in wealth to an average of $30,500 after eight years, while also spending twice as much on healthcare expenses as their peers.
Furthermore, the study revealed a doubling of Medicaid enrollment among the dementia group after eight years, which is indicative of financial distress. Dementia not only incurs a financial toll but also results in significant differences in caregiving arrangements. Individuals with dementia required three times more support from family caregivers and were five times more likely to enter a nursing home two years after diagnosis compared to those without dementia.
The cost of nursing home care, as well as other forms of care such as home healthcare providers, adds to the financial burden. Family caregivers often provide care without compensation. The research showed that on average, people with dementia received 45 hours of unpaid caregiving from family members and others, in contrast to the 13 hours received by those without dementia, a difference that persisted over eight years.
The presence of family members without disabilities nearby played a crucial role in healthcare utilization. For dementia patients without a spouse or child, the likelihood of living in a nursing home after eight years following diagnosis was approximately one in three. Those with a disabled spouse or a child living nearby also faced a higher likelihood of living in a nursing home. Conversely, individuals with a spouse, regardless of disability status, or with a spouse and child upon diagnosis, had better odds of avoiding nursing home placement.
The study’s findings suggest the need for policies that support individuals living with dementia. These policies may include models that enable dementia patients to stay in their homes or non-nursing home facilities. However, implementing such policies may increase Medicare’s financial burden. Additionally, programs aimed at assisting family caregivers, who take on significant responsibilities when caring for loved ones with dementia, could help alleviate some of the challenges associated with dementia care. In 2024, CMS plans to introduce programs that provide better family education to caregivers, and a pilot program launched in July 2023 aims to support family caregivers of dementia patients.