The staggering economic toll of dementia in the United States has reached a jaw-dropping $781 billion in 2025, a figure that underscores the immense pressure on the healthcare system, particularly the long-term care sector. A newly released report from the University of Southern California (USC) Leonard D. Schaeffer Institute for Public Policy & Government Service, in collaboration with the Alzheimer’s Association and the University of Pennsylvania, paints a stark picture of the financial crisis driven by this growing health challenge.
According to the report, a significant 30%, or $232 billion, of this colossal sum is directly attributed to medical and long-term care costs. With approximately 5.6 million Americans currently living with dementia, the financial strain on nursing homes and assisted living facilities is undeniable.
“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,” stated Julie Zissimopoulos, co-director of the Aging and Cognition program at the USC Schaeffer Center for Health Policy & Economics, and principal investigator of the US Cost of Dementia project.
The research, funded by an $8.2 million grant from the National Institute on Aging, utilized data from nationally representative surveys and administrative health data from the Centers for Medicare & Medicaid Services to build a comprehensive model of dementia’s economic impact. The findings reveal that Medicare (45.7%) and Medicaid (25.2%) shoulder over two-thirds of the medical and long-term care expenses, while individuals pay 22.4% out-of-pocket.
This financial burden extends beyond direct care costs. The model also accounts for lost earnings from individuals with dementia and their unpaid caregivers, who often reduce work hours or leave the workforce entirely, as well as the immeasurable cost of diminished quality of life.
The implications for the nursing home industry are profound. As the prevalence of dementia continues to rise with an aging population, facilities face increasing demands for specialized care, staffing, and resources. This economic reality necessitates innovative approaches to care delivery, operational efficiency, and policy advocacy to ensure the sustainability of the sector.
The USC-led research team aims to provide ongoing annual estimates and tools to help policymakers understand the economic consequences of Alzheimer’s disease and related dementias. This data will be crucial in evaluating the value of interventions and the impact of regulations on costs within the long-term care landscape.
Key Statistic: Approximately 30% of the total $781 billion cost of dementia in the US in 2025 is attributed to medical and long-term care.
Quote: “With this information, key stakeholders can better evaluate the value of interventions and the ways in which policies and regulations may impact costs in order to address drivers of costs,” according to USC.
This report serves as a critical reminder of the escalating financial challenges associated with dementia and underscores the urgent need for strategic solutions within the nursing home industry and across the broader healthcare ecosystem.