To determine (1) the number and proportion of Americans living with chronic conditions, and (2) the magnitude of their costs, including direct costs (annual personal health expenditures) and indirect costs to society (lost productivity due to chronic conditions and premature death). Analysis of the 1987 National Medical Expenditure Survey for prevalence and direct health care costs; indirect costs based on the 1990 National Health Interview Survey and Vital Statistics of the United States. US population. For the estimate of prevalence and direct costs, the National Medical Expenditure Survey sample of persons who reported health conditions associated with (1) use of health services or supplies or (2) periods of disability. None. The number of persons with chronic conditions, their annual direct health care costs, and indirect costs from lost productivity and premature deaths. In 1987, 90 million Americans were living with chronic conditions, 39 million of whom were living with more than 1 chronic condition. Over 45% of noninstitutionalized Americans have 1 or more chronic conditions and their direct health care costs account for three fourths of US health care expenditures. Total costs projected to 1990 for people with chronic conditions amounted to $659 billion--$425 billion for direct health care costs and $234 billion in indirect costs. The prevalence and costs of chronic conditions as a whole have rarely been estimated. Because the number of persons with limitations due to chronic conditions is more regularly reported in the literature, the total prevalence of chronic conditions has perhaps been minimized. The majority of persons with chronic conditions are not disabled, nor are they elderly. Chronic conditions affect all ages. Because persons with chronic conditions have greater health needs at any age, their costs are disproportionately high.