Meanwhile, private long-term care insurance has not gained much traction, and some insurers have exited the market.
With efforts at finding a treatment that can reverse or slow progression of the disease at an impasse, the families of many dementia patients have been left to fend for themselves. In 2012, more than 15 million caregivers provided about 17.5 billion hours of unpaid care valued at $216 billion, according to the Alzheimer's Association.
When care by a loved one is no longer an option, a health professional usually steps in, with costs paid by patients or families out-of-pocket until patients' assets are exhausted and they qualify for Medicaid. Medicaid and families are the two largest sources of payment for long-term care, with each paying $34 billion in 2013, according to the Alzheimer's Association.
Medicare also pays a price for caring for people with Alzheimer's, though it doesn't pay much for specific treatments since few are available. Dementia patients average more than three times as many hospital admissions a year and have higher rates of chronic conditions that often lead to hospitalizations.
Medicare spent $107 billion in 2013 on healthcare for Alzheimer's patients and those with other types of dementia. A 2008 analysis of Medicare data showed beneficiaries with Alzheimer's cost the government program three times more than those without dementia.
The rising tab for Medicare is explained in part by advancing medical technologies that have allowed people to live longer with chronic conditions such as dementia and the functional limitations that accompany such diseases. The financing system has failed to keep pace.
“The reality today is that there are not really a great set of tools for working families to plan for long-term care costs,” said Dr. Bruce Chernof, president and CEO of the SCAN Foundation, who recently served as chair for the federal Commission on Long-Term Care.
The divided panel that Chernof headed offered recommendations in October for reforming the financing and delivery of long-term care.
When it came to finding financing solutions, however, the commission could not agree. The majority recommended people buy private long-term care insurance plans. The minority sought the creation of a public social insurance program.
Experts say that with the implementation of the reform law, the biggest gap in healthcare financing is for people needing long-term care. “You can't prepare thorough savings for that kind of expense,” said Judith Feder, a public policy professor at Georgetown University who served on the commission and who favors public financing for the services.
Few Americans prepare financially or buy private insurance for long-term disability in old age because no one knows whether or when they are going to get Alzheimer's or dementia. “We need to spread that risk through insurance,” Feder said, “and that's going to take government action that includes broad-based financing.”
Follow Steven Ross Johnson on Twitter: @MHsjohnson