Economic Impact of Dementia in the United States Surges to $781 Billion in 2025, New USC Study Reveals
The staggering financial toll of Alzheimer’s disease and related dementias in the United States has reached an unprecedented $781 billion in 2025, according to a groundbreaking new model developed by researchers at the University of Southern California. This comprehensive analysis marks the first annual national estimate to capture the full spectrum of costs associated with dementia, encompassing not only direct medical expenses but also the broader economic consequences borne by patients, families, and the healthcare system.
Unlike previous assessments that primarily focused on healthcare expenditures, the USC cost model employs dynamic microsimulation techniques that integrate multiple data sources, including the Health and Retirement Study and administrative records from Medicare and Medicaid. This allows for a nuanced understanding of the evolving economic landscape shaped by dementia, capturing lost earnings from patients and caregivers, as well as reductions in quality of life that have previously been difficult to quantify.
Principal investigator Dr. Julie Zissimopoulos, co-director of the Aging and Cognition program at the USC Schaeffer Center and professor at the Price School of Public Policy, emphasizes the significance of this holistic approach. According to her, disentangling who shoulders these costs and tracking their trajectories over time is crucial for crafting targeted health policies that can alleviate the financial burden imposed by dementia on American society.
Central to the rising costs are medical and long-term care expenditures, projected to amount to $232 billion this year alone. Of this sum, patients and their families directly cover approximately $52 billion out-of-pocket. Public health insurance plays a dominant role, with Medicare spending $106 billion and Medicaid contributing $58 billion. These figures underscore the acute pressure dementia places on the U.S. healthcare infrastructure and highlight the vulnerabilities faced by affected households.
Beyond tangible financial outlays, dementia exacts profound societal costs. A substantial portion of the total financial impact — estimated at $308 billion — reflects the decline in quality of life experienced by both patients ($302 billion) and their care partners ($6 billion). This inclusion of intangible costs sets the USC model apart, illustrating the severe psychosocial toll dementia exacts beyond the balance sheets.
Unpaid caregiving is another critical, often invisible, component of dementia’s economic weight. Care partners provide an estimated 6.8 billion hours of unpaid care, which the study values at $233 billion. Furthermore, lost productivity due to caregivers cutting back on or leaving employment altogether translates to an $8.2 billion loss in earnings. These figures illuminate the often-overlooked sacrifices made by families and friends who bear an enormous personal and economic burden.
The USC research team also acknowledges the rapidly shifting landscape of dementia diagnostics and treatment. Advances such as novel therapeutics that slow cognitive decline in early-stage Alzheimer’s patients, alongside emerging blood-based biomarkers that facilitate earlier detection, could profoundly reshape the disease’s trajectory and associated costs. The model is designed to flexibly incorporate these innovations to forecast how they might alter future economic outcomes.
Interdisciplinary collaboration underpins this project. The research draws expertise from diverse USC units, including the Schaeffer Center for Health Policy & Economics, the Mann School of Pharmacy and Pharmaceutical Sciences, the Davis School of Gerontology, the Viterbi School of Engineering, and partnerships with the Alzheimer’s Association and University of Pennsylvania. This integrated approach ensures methodological rigor and relevance to real-world experiences by regularly involving patients and care partners in refining estimates.
Looking ahead, the U.S. Cost of Dementia Project plans to expand its scope further to uncover additional categories of economic impacts, aspiring to produce the most exhaustive national accounting of dementia’s financial burden to date. The ongoing nature of this work will provide policymakers, clinicians, and advocates with a critical evidence base to evaluate interventions and allocate resources effectively.
Funded by a cooperative agreement from the National Institute on Aging, part of the National Institutes of Health (grant #U01AG086827), this research represents a milestone in dementia epidemiology and health economics. Its findings illuminate the urgent imperative for intensified investment in prevention strategies, therapeutic development, and support systems to mitigate the staggering costs — both human and financial — posed by dementia.
Dr. Dana Goldman, founding director of the USC Schaeffer Institute for Public Policy & Government Service and co-principal investigator, highlights the urgent need for this knowledge. By providing a transparent, data-driven understanding of dementia’s multi-dimensional costs, the project lays the groundwork for evidence-based policy decisions aimed at reducing dementia’s burden on patients, families, and society at large.
The magnitude of these findings reverberates beyond economics, spotlighting dementia as one of the most pressing public health challenges of the 21st century. As the population ages and prevalence climbs, the demand for innovative policy solutions will only intensify. The USC model equips stakeholders with invaluable tools to anticipate future trends and to design holistic interventions that address both clinical outcomes and societal costs.
In sum, the USC-led cost model revolutionizes our understanding of dementia’s economic impact by transcending traditional health cost measurements to include lost productivity and intangible quality-of-life losses. This expanded perspective is crucial to fostering informed dialogue among policymakers, researchers, clinicians, and advocates committed to tackling the multifaceted challenges posed by dementia.
Subject of Research: Economic burden and cost modeling of dementia in the United States
Article Title: U.S. dementia costs this year will total $781 billion, according to a new cost model from USC
News Publication Date: 23-Apr-2025
Web References:
https://schaeffer.usc.edu/research/the-cost-of-dementia-in-2025/
https://schaeffer.usc.edu/people/julie-zissimopoulos-ph-d/
https://schaeffer.usc.edu/cost-of-dementia-model/
https://schaeffer.usc.edu/people/dana-goldman-ph-d/
Image Credits: USC Schaeffer Center
Keywords: Dementia, Alzheimer disease, Health care costs, Medical economics, Gerontology, Public health, Health care policy
