Socio Economic Impact of Alzheimer's disease

Dementia is a major factor in the structural ageing of the population, the costs of which are estimated to exceed revenue within 15 years, leading to a deficit equal to 5% of GDP (or $87 billion in today's dollars) by 2041-42 if no action is taken¹.

1. Extract from the Intergenerational Report, presented to Federal Parliament by the then Treasurer Peter Costello in 2002.

The Access Economics Report [March 2003] "The Dementia Epidemic: Economic Impact and Positive Solutions for Australia" reported that in Australia, dementia already costs $6.6 billion - $5.6 billion in real economic costs and $1 billion in transfer costs:

• Direct health costs: Dementia is the most expensive mental health item in Australia, costing $3.2 billion in 2002, dominated by residential care costs ($2.9 billion). By the end of the decade, these costs will nearly double.
• Real indirect costs: These are dominated by carer costs ($1.7 billion) valued at replacement cost, together with the lost earnings and mortality burden of patients ($364 million) and the cost of aids and home modifications ($120 million).
• Transfer costs: $592 million of tax is foregone each year for people with dementia and their families and carers. Carer payments represent another $324 million, while additional welfare payments total $52 million.

In 2005 dementia costs totaled $6.6 billion, nearly 1% of GDP. By 2050, spending on dementia is estimated to reach $83 billion and will outstrip that of any other health condition.

The socio-economic and disability burden of dementia is severe. Dementia costs more, over more years, than any other national health priority area.

• 98.5% of people with dementia are disabled and use medical services more than the age-average.
• People with dementia have lower than average incomes and are under-represented in the workforce - 2.3% compared to the Australian average of 8.5% for people over age 65.
• Dementia cost over 117,000 years of healthy life (disability adjusted life years or DALYs) in 2002, and severe dementia has the highest disability weight of all conditions, equal with severe rheumatoid arthritis and higher than terminal stage cancer.
• Dementia is the second largest cause of disability burden in Australia after depression, and will become the largest by 2016, continuing to outpace other chronic illnesses.
• The opportunity cost of lost employment has been estimated at $355 million. This will increase significantly with the rising incidence of Alzheimer's disease.

There is some evidence to suggest that Alzheimer's disease is under-diagnosed and under-reported. A survey of 281 General Practitioners in the UK found that only 39% would inform their patients of a diagnosis of dementia, compared to 95% who would inform them of a diagnosis of terminal cancer (Black et al, 2001). The fact that incidence may be considerably higher than estimated underscores the urgent need for well-funded research to find ways to halt this looming crisis.

In addition it is highly probable that there will be major increases in incidence among certain genetically predisposed groups - indigenous people and those with Down's syndrome - as gains in health increase their longevity.