Due to the rapid rate of demographic change in Sri Lanka where the percentage of elderly are increasing speedily in relation to the younger population there is increasing concern about the potential cost and implication of this trend for the health sector and its ability to meet future patient demands. By developing a model of baseline health system expenditures, incorporating identified trends and factors this study assesses the possible impacts of demographic ageing on national health expenditures and resource requirements in Sri Lanka over the next century. The study also undertakes a preliminary assessment of what impact the ageing population may have on the disease composition of future health spending. Funded by the United Nations Department of Economic and Social Affairs, this study developed an actuarial health cost projection model for Sri Lanka, covering the period 2001-2101. Unlike any prior research on the topic this new research also attempts to project expenditures by disease resulting in this study being used by the United Nations in its World Economic and Social Survey 2007 and also by the World Bank Sri Lanka Ageing Study.