U.S. Dementia Costs Approach Trillion Dollar Mark

The hidden financial tsunami of dementia will crash across America with unprecedented force this year, reaching $781 billion in total economic burden, according to new research from the University of Southern California.

This staggering figure, revealed yesterday in the first of planned annual estimates from a multidisciplinary USC-led team, goes far beyond traditional accounting of medical expenses to capture dementia’s true cost to society.

“Having a better understanding of who bears these costs and how they change over time can inform evidence-based policies that may ultimately reduce the financial impact of dementia,” said Julie Zissimopoulos, co-director of the Aging and Cognition program at the USC Schaeffer Center for Health Policy & Economics and professor at the USC Price School of Public Policy.

An estimated 5.6 million Americans are living with dementia in 2025, including 5 million who are 65 and older. Beyond the immediate medical expenses, the economic ripple effects spread outward through families and communities in ways rarely captured by conventional cost analyses.

“This research demonstrates the enormous toll dementia places on patients, their families and care partners. But it also points to the potential value of developing ways to prevent and treat Alzheimer’s and related diseases that cause dementia.”

The largest component of the economic burden comes from a factor typically overlooked: the devastating decline in quality of life for patients, valued at $302 billion, and their care partners at $6 billion. Care partners provide a staggering 6.8 billion hours of unpaid care annually, worth an estimated $233 billion.

Healthcare costs alone are projected to reach $232 billion this year. Medicare bears the heaviest institutional burden at $106 billion, followed by Medicaid at $58 billion. Meanwhile, patients and families will pay $52 billion directly out of pocket.

For families already stretched thin by caregiving responsibilities, the financial burden often includes another hidden cost: $8.2 billion in lost earnings from those who reduce work hours or leave jobs entirely to provide care.

The new cost model represents a significant advance in understanding dementia’s economic impact, funded through a multi-year cooperative agreement with the National Institute on Aging. Researchers leveraged data from several large national surveys and administrative health records from Medicare and Medicaid to create a comprehensive accounting using dynamic microsimulation techniques.

“This research demonstrates the enormous toll dementia places on patients, their families and care partners. But it also points to the potential value of developing ways to prevent and treat Alzheimer’s and related diseases that cause dementia,” said Dana Goldman, founding director of the USC Schaeffer Institute for Public Policy & Government Service and co-principal investigator on the project.

The timing of this research coincides with rapid developments in dementia care, including new treatments that slow cognitive decline in some early-stage Alzheimer’s patients and innovative blood tests enabling earlier detection.

Moving forward, the USC team aims to provide tools helping researchers and policymakers understand how evolving treatments, prevention strategies, and policies might affect costs across the healthcare system and society. Their approach stands out for its multidisciplinary collaboration, bringing together experts from across USC’s schools alongside partners from the Alzheimer’s Association and University of Pennsylvania.

Perhaps most importantly, the team regularly consults with patients and care partners to ensure their model reflects the lived reality of families navigating the devastating journey of dementia—a journey whose financial toll is now measured in the hundreds of billions, with the human cost remaining incalculable.