Medicare expenditures attributable to dementia.

OBJECTIVE: To estimate dementia's incremental cost to the traditional Medicare program.

DATA SOURCES: Health and Retirement Study (HRS) survey-linked Medicare part A and B claims from 1991 to 2012.

STUDY DESIGN: We compared Medicare expenditures for 60 months following a claims-based dementia diagnosis to those for a randomly selected, matched comparison group.

DATA COLLECTION/EXTRACTION METHODS: We used a cost estimator that accounts for differential survival between individuals with and without dementia and decomposes incremental costs into survival and cost intensity components.

PRINCIPAL FINDINGS: Dementia's five-year incremental cost to the traditional Medicare program is approximately $15 700 per patient, nearly half of which is incurred in the first year after diagnosis. Shorter survival with dementia mitigates the incremental cost by about $2650. Increased costs for individuals with dementia were driven by more intensive use of Medicare part A covered services. The incremental cost of dementia was about $7850 higher for females than for males because of sex-specific differential mortality associated with dementia.

CONCLUSIONS: Dementia's cost to the traditional Medicare program is significant. Interventions that target early identification of dementia and preventable inpatient and post-acute care services could produce substantial savings.