OBJECTIVE: To develop a method to test the hypothesis that DM and HT are the most frequent concomitant illnesses among such disease groups as cardiovascular (CVD), joint disorders, renal failure, liver and kidney diseases and to calculate the annual medical care costs of HT and DM compared with estimated average care costs in the disease groups. METHODS: Diagnosis-specific estimates for health care utilization and associated medical expenses were constructed by employing a linear model with exogenous population weights and normalizing coefficients using the National Medical Expenditure Survey data. Statistical analyses for demographic parameters and design effects on mean cost were obtained using linear regression models. RESULTS: Among diabetics the most prevalent conditions were HT (40%), CVD (26%), joint disorders (23%), and fatigue (21%). DM and any of the 15 comorbidities incurred annual average costs ranging from $2,000 to $48,100, 1.5 to 3.5-fold higher than the estimated disease-specific average costs. Among patients with HT the most prevalent conditions were joint disorders (23%), CVD (22%), fatigue (20%), and DM (18%). HT and any of the 15 comorbidities incurred annual average medical costs 1.3-2.5-fold higher than the estimated disease-specific average medical costs. Patients with DM and HT constitute over 60% of all patients treated annually for CVD, 52% for renal failure, 55% for joint disorders and 45% with liver diseases. Federal programs compensate 38% of medical care costs in HT and 56% in DM. Out-of-pocket expenses pay 37% of costs in HT and 20% in DM. CONCLUSION: Our findings suggest that HT and DM are responsible for more than 60% of health care costs in some of the 15 researched disease categories. Treating of DM and HT to goal will help to contain medical care costs for health care providers and payers irrespective of any other comorbidity, and contribute to cost-effective disease management, and quality of care.