This study investigates the causes of increasing medical costs from the aspects of concentration and persistence. Counterfactual calculation shows that population ageing increases medical expenses at different subpoints and narrows the distribution gap of medical expenses, which are caused by the high concentration and persistence of medical expenses of the older population. The medical cost of the older population is not only characterized by a high amount of single hospitalization cost, a large proportion of continuous hospitalization, and a strong dispersion of medical cost, but also induces a heavier burden in all of the five levels of medical cost. The influence of population ageing to the increase of medical costs is lower than that of the change of the whole population age structure. The influence of endowment effect increases with time, and the medical costs of high percentiles increase the most. In addition, the improvement of health awareness plays a dominant role in the structural effects that affect the growth of medical costs. The theoretical framework constructed in this study which describes how the medical demand of the aged population affects the medical cost can explain the reality of the rapid growth of medical cost under the background of population ageing in China.