Effects of Diagnosed Dementia on Medicare and Medicaid Program Costs

This study examines the impacts of physician-diagnosed Alzheimer's disease and related dementias (ADRD) on Medicare and Medicaid program costs in 1994 and 1999. An innovative method is employed to estimate program payments over the life cycle starting at age 65. Using data from the 1994 and 1999 National Long-Term Care Surveys, merged Medicare claims, and national program data for Medicaid, we find that the share of total Medicare and Medicaid payments attributable to diagnosed ADRD was 5.46% in 1999. Total annual program payments attributable to ADRD decreased between 1994 and 1999, in contrast to an increase implied by a cross-sectional approach.