This study utilized two separate research designs to examine whether the initiation of alcoholism treatment is associated with a change in overall medical care cost in a population of alcoholics enrolled under a health plan sponsored by a large midwestern manufacturing corporation. In the longest longitudinal study of alcoholism treatment costs to date, a review of claims filed from 1974 to 1987 identified 3,729 alcoholics (3,068 of whom received treatment and 661 of whom did not). In one design, a time-series analysis found that following treatment initiation the total health care costs of treated alcoholics--including the cost of alcoholism treatment--declined by 23% to 55% from their highest pretreatment levels. Costs for identified but untreated alcoholics rose following identification. In a second design, analysis of variance was used to control for group differences including pretreatment health status and age. This analysis indicated that the posttreatment costs of treated alcoholics were 24% lower than comparable costs for untreated alcoholics. The study provides considerable evidence that alcoholism treatment can reduce overall medical costs in a heterogeneous alcoholic population (white collar/blue collar; fee-for-service/HMO).