14: Direct and indirect costs of dementia to the Australian economy
On this page:
There is no single source of data to estimate total health and aged care expenditure due to dementia. Most reports on the economic cost of dementia to the Australian community draw heavily on AIHW disease expenditure studies, which describe the activities and characteristics of Australia’s health care system in terms of estimated expenditure for different demographic groups in the population, and expenditure relating to different groups of diseases (based on Australian Burden of Disease Study conditions) (AIHW 2020). The latest expenditure estimates for 2018–19 were derived by combining information from a wide range of sources, including the National Hospital Morbidity Database, Medicare Benefits Schedule (MBS), Pharmaceutical Benefits Scheme (PBS), Private Hospital Data Bureau Collection, and the AIHW Health Expenditure Database. Due to data availability, allocated spending is skewed towards activities in hospitals (AIHW 2021).
Disease expenditure studies can use different data and estimation methodologies over time, which creates challenges reporting changes in health expenditure attributable to dementia over time (AIHW 2020). The analysis of disease expenditure is complex and resource intensive, which limits the frequency and timeliness of the estimates. Dementia in Australia (AIHW 2023) reports health and aged care expenditure estimates that are directly attributable to dementia to avoid including expenditure related to other conditions. Data limitations mean that expenditure estimates exclude costs such as state and territory expenditure on aged care, government payments to support people with dementia and their carers, and indirect expenditure (such as lost wages and productivity) – therefore, the expenditure estimates should be considered conservative (AIHW 2023).
Australia’s response to dementia requires regular monitoring and reporting of both the direct costs and the substantial indirect costs, such as informal care, lost productivity, and income support provided to people with dementia and/or their carers. To date, reporting of indirect costs of dementia has been on an ad-hoc basis. The National Centre for Social and Economic Modelling (NATSEM) has recently estimated the economic and societal cost of only one type of dementia (Alzheimer’s disease) in Australia (Brown et al. 2022). Consistent investment in estimating both the direct and indirect costs of dementia in Australia is needed, particularly with future changes in dementia policies and program/service delivery.
Proposed data improvement activities
There are 2 main activities proposed to improve data on direct and indirect costs of dementia to the Australian economy. These include activities to:
- expand existing national reporting on the direct expenditure of dementia
- undertake updates on the indirect costs of dementia in Australia.
Each activity provides information on the intended outcome, priority rating, level of investment required, timeframe for completion of the activity and who is responsible for undertaking the activity.
This activity would involve expanding current national reporting on the expenditure of dementia to leverage new data being available and include government expenditure on welfare and disability support services.
The Australian Bureau of Statistics’ (ABS) Multi-Agency Data Integration Project (MADIP) contains information on income support and other Australian Government payments linked to a range of other national health data sets. The addition of long-term health condition questions in the 2021 Census and the incorporation of other dementia identifiers into MADIP would enable analysis of government expenditure on income support and other payments to people with dementia and their carers. This would expand the information about direct expenditure for caring for people with dementia across the health and aged care sectors in Dementia in Australia (AIHW 2023).
The National Disability Insurance Scheme (NDIS) provides funding for disability-related support for people aged under 65, including people with younger onset dementia. The NDIS data held by the National Disability Insurance Agency include primary disability information (and additional diagnoses), which could be used to identify people with dementia for expenditure analysis.
Outcome: Improved data on the direct expenditure on dementia available to support investments in research and prevention initiatives
Priority: Medium
| Alignment | Foundational | Dependency | Priority Group Data | Priority score (Maximum 10) |
|---|---|---|---|---|
| 2 | 1 | 1 | 1 | 5 |
- Alignment: moderately important data gap
- Foundational data: method development
- Dependencies: ability to appropriately identify people with dementia in data sets
- Priority group reporting: likely – persons with disability, younger onset dementia
Level of investment: Low
Timeframe: Medium term (2–6 years)
Responsible stakeholder: AIHW National Centre for Monitoring Dementia.
To date, there has been ad-hoc reporting on the indirect cost of dementia. In early 2022, the University of Canberra’s NATSEM published The Economic and Societal Cost of Alzheimer’s disease in Australia, 2021–2041 (Brown et al. 2022). This report (commissioned by Biogen Australia) is an extension of an earlier report produced by NATSEM, Economic Cost of Dementia in Australia 2016–2056 (Brown et al. 2017). However, the latest report focuses specifically on Alzheimer’s disease rather than all dementia types. The 40-year projection of estimated indirect costs of dementia from the earlier report may not be reliable, particularly with dementia data developments and implementation of the National Dementia Action Plan.
This activity involves investment in studies designed to estimate the indirect costs of dementia in Australia to ensure this is reflective of the current state and to examine how these change over time. Consistent reporting of indirect costs for dementia collectively is needed, particularly to reflect future changes in national dementia policy and program/service delivery. This would require updates to estimated costs.
Outcome: Up-to-date estimates of the indirect costs due to dementia to support investments in service provision, research and so on
Priority: Medium
| Alignment | Foundational | Dependency | Priority Group Data | Priority score (Maximum 10) |
|---|---|---|---|---|
| 2 | 1 | 1 | 1 | 5 |
- Alignment: moderately important data gap
- Foundational data: method development
- Dependencies: quality of data to inform estimates
- Priority group reporting: likely – potential if demographics captured at scale
Level of investment: Low
Long-term investment would be required for concurrent studies.
Timeframe: Medium term (2–6 years)
Responsible stakeholder: Academic researchers
AIHW (Australian Institute of Health and Welfare) (2020) Dementia data gaps and opportunities, AIHW, Australian Government, accessed 4 April 2023.
AIHW (2021) Disease expenditure in Australia 2018–19, AIHW, Australian Government, accessed 19 July 2023.
AIHW (2023) Dementia in Australia, AIHW, Australian Government, accessed 19 July 2023.
Brown L, Hansnata E and La H (2017) Economic cost of dementia in Australia 2016–2056, NATSEM, University of Canberra, accessed 9 May 2023.
Brown L, Li J and La H (2022) The Economic and Societal Cost of Alzheimer’s disease in Australia, 2021–2041, NATSEM, University of Canberra, accessed 9 May 2023.