This study compares the health care costs of The Netherlands with the United States and Sweden and estimates the impact of demographic change on costs. Total health care costs were allocated to disease, age, sex and specific subsectors. For The Netherlands 75% of the costs in 1988 were assigned to specific diseases. Costs of mental disorders and other chronic non-fatal diseases dominate, followed by cardiovascular diseases. The effect of age is strong from age 70 years onwards. The effect of sex, adjusting for age, is small, except for elderly women, who are more expensive. Both total and disease-specific costs are similar in The Netherlands and Sweden, but differ from those in the US. The available data suggest that the differences in medical practice and health care systems may explain a substantial part of the divergent results; demographic or epidemiologic aspects seem less important. Ageing induces, in the Dutch case, a modest 0.7% annual increase in costs. The contribution of other forces in the increase of costs is probably more important. A structural upward pressure on costs also prevails in The Netherlands and Sweden, but it is more prominent in the US, due to a large amount of expensive surgery and high administration costs.