Purpose: This report examines health care rates, charges, and patterns of consumption from a comprehensive California hospitalization data set covering 1986-1995. An improved understanding of current trends in health care consumption would facilitate the development of future resource allocation models. Design and Methods: We obtained discharge and charge data from all licensed nonfederal hospitals in California between 1986 and 1995 relating to inpatient discharges of individuals aged 55 years and older. We used the direct method of standardization to adjust discharge statistics for differing age and gender case mixes, and we adjusted all charges to 1990 dollars for cost comparisons. Results: Standardized to the 1990 population, annual discharge rates declined between 1986 and 1992, then leveled off to about 227 per 1,000 between 1993 and 1995. Rates of both discharges and charges for men consistently exceeded those for women, there being about a 5-year lag between female and male rates of discharge. The insurance payer mix shifted between 1986 and 1995, with dramatic declines in private insurance mirrored by increases in managed care. Implications: Hospital care consumption among the elderly people in California demonstrates a trend of increasing adjusted total charges despite declining hospitalization rates. Overall, individuals aged 55 years and older comprise 18% of the California population and incur 52% of discounted total charges. Private insurance has virtually disappeared, replaced by HMO/PHP/PPO organizations; still, charges to governmental sources (primarily Medicare and Medi-Cal) account for about 78% of total billings. Absolute numbers of Californians aged 55 and older are projected to increase 54% by 2010 and 226% by 2025 compared with 1995, engendering a dramatic increase in the financial burden of health care to this segment of the population.