With the aging of society, issues concerning the reform of the Dutch health care system are ranked high on the political agenda. Sensible reforms of the health care system for the elderly require a thorough understanding of the health status of the old and of its dynamics preceding death. The health status of the elderly is intrinsically a multidimensional and dynamic concept and a rich set of indicators is needed to capture this concept in its full extent. This feature of health requires techniques to reduce dimensionality as, in general, it is difficult to simultaneously handle all indicators in any economic analysis. In the first part of this paper we focus on methods that comprise these multidimensional measures into a limited number of indices. The Grade of Membership (GoM) approach introduced by Manton and Woodbury (Methods of Information in Medicine 1982; 21) is specifically designed to characterize the complex concept of health. The method simultaneously identifies all dimensions of the concept of interest and the degrees to which an individual belongs to each of these types (i.e. grades of membership). We apply the method to a set of 21 indicators from a rich database of the Longitudinal Aging Study Amsterdam (LASA). The individual degrees of involvement in the different health dimensions obtained from this method are used in subsequent analyses of health and mortality.