Alzheimer's Disease Costs Business $61 Billion a Year in Caregiver Time, Productivity Loss and Medical Expenses, Study Shows

6/27/2002

From: Scott Treibitz for the Alzheimer's Association, 703-276-2772, ext. 11

WASHINGTON, June 27 -- American business spends an astonishing $61 billion a year on Alzheimer's disease, a twofold increase from the amount calculated just four years ago and a dollar amount equivalent to the net profits of the top 10 Fortune 500 companies -- according to a new study, Alzheimer's Disease: The Costs to U.S. Businesses in 2002.

The report, commissioned by the Alzheimer's Association and released today at a Long-Term Care Symposium sponsored by the U.S. Chamber of Commerce, warns that the cost to U.S. businesses and the nation will continue to soar as baby boomers hit the highest risk age for getting the disease.

Study author Dr. Ross Koppel, a researcher and professor at the University of Pennsylvania and president of the Social Research Corporation, provides detailed breakdowns of the $61 billion and calculates that the cost to business of health care for people with Alzheimer's disease is $24.6 billion, including a business tax contribution to federal health care costs and research. The report adds that the total cost to businesses of workers who are caregivers for people with Alzheimer's disease is $36.5 billion. This includes (in round numbers): absenteeism - $10 billion; productivity losses -- $18 billion; worker replacement cost -- $6 billion; continuing insurance for workers on leave and temporary worker replacement fees -- $2 billion; and Employee Assistance Program usage -- $64 million.

"We have known for a long time that Alzheimer's disease exacts an enormous economic toll on individuals and families, who exhaust their life savings providing and paying for care, and on state and federal governments that spend billions through Medicare, Medicaid and smaller programs to help pay for health and long term care," said Stephen McConnell, interim president and CEO of the Alzheimer's Association. "Less well known is the financial burden Alzheimer's inflicts on businesses -- even though the vast majority of people with the disease are out of the workforce by the time it strikes."

"The $61 billion cost is just the tip of the iceberg," said McConnell. "These calculations are based on 4 million people -- the number estimated to have Alzheimer's disease now. Within the decade, baby boomers will enter their retirement years, and the number with Alzheimer's will begin to explode -- to as many as 14 million by the middle of the century. The costs -- to families, to government, and to business -- will be unsustainable.

"This study underscores the importance of employers' investment in support of their employees who are caregivers, and it highlights the immediate need to reexamine the role of Medicare," said McConnell. "It also provides compelling new evidence that the nation needs to expand its research on Alzheimer's disease to head off an epidemic of disastrous proportions."

McConnell urged the business community to join in an all-out effort to reverse the course of Alzheimer's disease before it overwhelms the nation. "There is no one way out of this dilemma, and the nation has only a narrow window of time -- perhaps as little as 10 years -- to find the answers soon enough to make a difference,"

The Alzheimer's Association action plan includes:

-- Employer support for workers facing long term care challenges today and in the future -- through flexible work arrangements, caregiver support, and assistance in accessing long term care insurance for those for whom it is an appropriate option.

-- Improvements in Medicare to address chronic health care needs to reduce the kinds of excess disability and avoidable illnesses that create and exacerbate long term care needs.

-- An immediate investment in research, including $1 billion at the National Institutes of Health, to find a way to slow down and prevent Alzheimer's disease in the 14 million baby boomers who are now at risk.

"Alzheimer's is one of the nation's most expensive diseases, exceeded only by heart disease and cancer," according to Dr. Koppel. "With a growing proportion of elderly, the cost of AD will increase almost four-fold in the next few decades -- perhaps much more if we consider the decrease in 'free' caregiving associated with the increase in women's labor force participation or the trends toward flexible benefit programs that include eldercare and long term care insurance."

--- Total Business Costs For Alzheimer's Disease (in billions)

Business costs for workers who are caregivers of people with Alzheimer's disease: $26.024 (1998); $36.512 (2002) Business costs of health care and health care research for people with Alzheimer's disease: $7.144 (1998); $24.634 (2002) Total business costs for Alzheimer's disease: $33.168 (1998); $61.146 (2002)