A longitudinal analysis of the lifetime cost of dementia.

Dementia has become a major public health challenge for our aging society. Currently, about 5.2 million Americans live with Alzheimer's disease (AD) and other dementias, and the estimated societal cost of formal and informal care for these conditions is more than $140 billion annually (2008; Philip et al. 2002; Plassman et al. 2007; Gajital 2008; Goldman and Joyce 2008). In 2012, the first cohort of the 76 million “Baby Boomers” born between 1946 and 1964 will begin to turn 65. How this demographic trend will influence the future number of dementia cases and the societal cost of care for these cases is of great public health and policy significance. Based on the current estimates of the dementia prevalence rate and the cost of dementia care found in cross-sectional studies, the National Institutes of Health (NIH) and the Alzheimer's Association predict that increased population size and extended longevity will lead to significant increases in dementia cases among Baby Boomers—as many as double the cases—and escalating societal cost of dementia care that could top $20 trillion over the next 40 years (Alzheimer's Association 2010a,b). However, the results from other studies suggest these prevalence numbers and cost estimates may not be directly applicable to the Baby Boomer generation and suggest longitudinal analysis regarding the future health and economic burden of dementia (Brookmeyer and Gray 2000; Brookmeyer et al. 2002; Langa et al. 2008). The major reason is like many other chronic conditions among the elderly, the total number of dementia cases and the cost of dementia care are determined not only by the percentage of elderly who will develop these conditions before death but also by the longitudinal course of illness of these conditions over the life span. This course of illness is related both to age and to proximity to death at disease onset. For example, using data in the Health and Retirement Study from multiple birth cohorts, Langa et al. (2008) found that despite increased longevity and higher probability of having dementia before death, younger cohorts have more compressed episodes of dementia shortly before death, characterized by later onset and shorter duration. This finding is attributed to special characteristics of the younger cohorts, especially higher education level, which is a known mitigating factor for dementia (Friedland 1993; Katzman 1993; Stern et al. 1994; Herbert et al. 2003; Gatz, Prescott, and Pedersen 2006; Plassman et al. 2007; Langa et al. 2008). Such results suggest that the cost of care for dementia should be more precisely defined as a longitudinal cost over the course of illness. A patient with a shorter episode of dementia before death in an older age could cost either more or less to society than one with a more protracted course of illness that begins at a younger age. Existing studies that take the longitudinal perspective reached quite different conclusions regarding the effect of dementia on medical care costs from the cross-sectional studies. Using the National Long-Term Care Survey (NLCS) merged with Medicare claims, researchers found that patients with AD and related conditions do not have higher Medicare expenditures over the last 5 years of their life than the nondemented elderly, and that the total annual program payments of Medicare and Medicaid attributable to AD and related disorders even decreased slightly between 1994 and 1999 (Ayyagari, Salm, and Sloan 2008; Lamb, Sloan, and Nathan 2008). However, these studies have several limitations that reduce their applicability to the general Medicare population and to future Medicare beneficiaries. First, these studies used comparatively less recent NLCS data from 1982 to 1999, which focus on a more severely ill group of elderly who needed assistance with at least one activity of daily living (ADL) and instrumental activity of daily living (IADL). Therefore, their results could overestimate the prevalence and underestimate the lifetime cost of dementia. Second, these measurements of dementia and related conditions are based exclusively on diagnosis codes from Medicare claims, the use of which could lead to underestimates of the prevalence of dementia (Taylor and Sloan 2000; Taylor et al. 2009). Third, NLCS has limited information regarding demographic and socioeconomic features of the respondents. In particular, 48.1 percent of the sample has missing data on education level, which is the most important mitigating factor of dementia and longevity; therefore, the absence of this information could limit the external validity of the results. Fourth, although both studies did estimate the longitudinal Medicare expenditures attributed specifically to dementia while controlling for the endogeneity of dementia status and aging via counter-factual simulation or propensity score matching, they were unable to control for cohort effects. Instead, they assumed that the aging process for future generations will be similar to that of the current elderly generation. Hence, they could not model future generations’ aging and dementia experience, which is predicted to feature extended longevity, but more compressed dementia episodes. In this study, we addressed a number of these limitations in the previous literature to conduct a longitudinal analysis of the lifetime cost of dementia. Our study is designed to achieve three major goals: (1) to precisely measure the onset and duration of dementia after adjusting for longevity and education level, (2) to estimate lifetime Medicare and Medicaid expenditures related to dementia, and (3) to simulate the effect of changes in population character on the prevalence, course of illness, and longitudinal cost of care of dementia at population level. To achieve these goals, we first used data from a nationally representative sample of the entire elderly population—the Medicare Current Beneficiary Survey (MCBS) from 1997 to 2005. Second, we created an algorithm to measure dementia status by combining information from the MCBS survey, inpatient and outpatient claims, and prescription drug event files. Finally, we conducted a multistage analysis method to first estimate the probability of developing dementia before death based on age and then estimate Medicare and Medicaid expenditures based on dementia status, age, and time to death. Based on the estimation, we conducted a series of cohort-based simulations by imputing the parameters from the first two steps into a dynamic aging simulation dataset to incorporate the dementia onset and cost of care over the life span.