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Life Health > Long-Term Care Planning

Bill Nelson: Will Alzheimer's bankrupt us?

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The United States needs to spend more on Alzheimer’s disease research to keep the condition from causing an economic catastrophe.

Lawmakers and witnesses agreed on that point during a recent hearing on Alzheimer’s research and other forms of dementia research organized by the Senate Special Committee on Aging.

Sen. Bill Nelson, D-Fla., chairman of the committee, cited reports that Alzheimer’s is already costing the country $140 billion per year and is on track to cost the country $1 trillion per year in the 2040s. 

“Until we find a cure, are we looking at bankruptcy?” Nelson asked Michael Hurd, an aging research from the RAND Corp.

“Families are facing bankruptcy,” Hurd said. “Families are facing catastrophic spending.”

Hurd said RAND researchers found that, after they adjusted for complicating conditions and demographic characteristics, the total annual average cost of providing care for someone with dementia was about $42,000 per year, with an average of about $14,000 going toward the cost of nursing home care, $5,700 spent on formal home care and about $9,000 attributable to wages lost by informal caregivers. 

(The researchers average the cost of each type of resource over all individuals with Alzheimer’s, even if only some individuals with Alzheimer’s used those services.)

Another witness, Dr. Ronald Petersen, a Mayo Clinic Alzheimer’s researcher, said the country is spending just $500 million on Alzheimer’s research and $2 billion on heart disease research, even though mortality due to heart disease has been decreasing and the number of deaths due to Alzheimer’s has been skyrocketing.

President Obama has recommended in a fiscal year 2013 budget proposal that the country increase spending on Alzheimer’s research to $600 million.

Sen. Susan Collins, R-Maine, said she believes Alzheimer’s research spending should increase to at least $1 billion.

Hurd said he believes spending $2 billion per year would be reasonable, in part because simply testing any promising treatment found will cost about $100 million.

The Advisory Council on Alzheimer’s Research, Care and Services is getting ready to release its first annual update of a National Alzheimer’s Plan that was released in May 2012.

The National Alzheimer’s Project Act of 2011 (NAPA) requires the council to update the plan every year, and to determine whether the country is making adquate progress toward finding ways to prevent or cure Alzheimer’s by 2025.

The first version of the report mentioned private long-term care insurance (LTCI) only in passing.

During the hearing, Sen. Richard Blumenthal, D-Conn. told Hurd, “We have not, in my view, developed the kind of private insurance policies that families need to deal with this problem.”

“It’s a big lack in the insurance market,” Hurd said. “It’s an insurable situation in principle.”

But only 13 percent of people ages 55 and older take up LTCI products, and that’s a sign of lack of satisfaction with the products, Hurd said.

One problem is that, in part because insurance companies lack information about the likelihood that advances in medicine will help people with Alzheimer’s live for 15 or 20 years in a nursing home, a typical LTCI policy puts a cap on lifetime benefits and fails to address the “extreme upper tail” of long-term care (LTC) cost, Hurd said.

“You need insurance when your house burns down, not when you scorch your rug,” Hurd said.

Policymakers need to look to help consumers insure against truly catastrophic LTC risk, Hurd said.

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