The Continuous Medicare History Sample File (CMHSF) was used to derive an estimate of the lifetime direct medical expenses attributable to two chronic diseases, lung cancer and female breast cancer. These two cancers are the leading cancer causes of death in men and women in the United States. They inflict large costs on the population, both direct and indirect, but the costs have been difficult to measure. The primary obstacle to quantification is the intermittent and long-term nature of treatment for these diseases. A complete record of expenses cannot usually be obtained from one source, however, a review of all the national health surveys, as well as the Medicare statistical files identified the CMHSF, which is maintained by the Health Care Financing Administration in a format suitable for calculation of cumulative medical expenses. Some of the pertinent features of the CMHSF include the following: 1) it is a nationally representative sample of the Medicare population, 2) it is longitudinal covering an 8-year period from 1974 to 1981, 3) it captures the majority of medical expenses for each enrollee, and 4) it can be linked to other national data bases such as the National Death Index. Charges for three phases of cancer treatment were derived from the file: initial therapy, maintenance care, and terminal care. A method is described for computing the present value of life-time treatment costs from the phase-specific charges. The lifetime cost of treating breast cancer in 1984 dollars is $36,926 and lung cancer is $12,510.