Objective: To analyze the medical demand of the aged and its influences on the increase of medical cost in the background of aging and rapid economic development in China，so as to provide reasonable suggestions for implementing government's policy system. Methods: The panel threshold model was used to study the relationship between population ageing and medical costs at different stages of economic development. Results: There is a dual threshold effect of economic development in the aging process. The first threshold is when the per capita GDP reaches about 6434 yuan，which is the critical point for the release of medical demand of the elderly; the second threshold，when the per capita GDP reaches about 46770 yuan，is the critical point for the stabilization of medical demand of the elderly. Conclusion: When the economic development is at a lower stage，the health shows the characteristics of more investment goods，the aging has no significant influence on the medical cost (P＞0.05). When the economic development is at a higher stage，the aging has no significant influence on the medical cost，the aging promotes the increase of medical cost，and the medical demand is more characteristic of consumer goods. The level of health services and social security in China should be further improved to enhance the satisfaction of elderly people's well-being in their later years.