This paper deals with the factors that need to be taken into account in forecasting changes in health expenditures in the United States between 2000 and 2040. These factors are (1) increases in life expectancy and changes in the age structure of the population; (2) trends in health expenditures by age; (3) the average age of onset of chronic diseases; (4) the impact of technological improvements on the cost of health interventions; (5) the income elasticity of the demand for health services; (6) changes in the average age of retirement; and (7) changes in the methods of financing health care.