OBJECTIVES: Due to future demographic change health policy has to focus on elderly people. The aim of this study was to measure service utilization and direct health care costs and its predictors for the age group 75+ in Germany from the societal perspective. METHODS: A bottom-up costing study was conducted using a representative cross-sectional population sample. Study subjects (N=452) were recruited through 20 general practitioners in Saxony. The main instrument was a questionnaire of service utilization and costs administered by an interviewer. The Chronic-Disease-Score (CDS) was calculated based on reported drug utilization. Predictors were derived by multivariate regression models. RESULTS: Study subjects caused average direct health care costs of EUR 3868 in 2004. This included: inpatient treatment 36%, pharmaceuticals 28%, outpatient services 14%, home care 9%, medical supply and dentures 6%, nonphysician providers 4%, assisted living 1% und transport 2%. Female gender, a higher level of vocational training and a higher CDS were predictors of higher total costs. Age and family status had no significant influence. Within the 3 month preceding the interview study subjects utilized at least once: pharmaceuticals 98%, outpatient services 98%, nonphysician providers 29%, home care (12 months) 23%, inpatient treatment (6 months) 18%, medical supply and dentures 16%, assisted living (6 months) 4% and transport 54%. 54% of the study subjects accounted for 90% of total costs. CONCLUSIONS: Elderly people in the age group 75+ cause substantial direct health care costs in particular for inpatient care and pharmaceuticals. Measured costs are almost twice as high as the average expenses paid per insured person by compulsory sickness funds and long-term care insurance in 2004, in Germany. Further research should focus on heavy users, thereby concentrating on the two main cost categories, which account for 64% of the average direct costs.