In 1994, the National Center for Health Statistics estimated that more than 14 million people (54 per thousand) had chronic bronchitis and sought treatment for 90.9% of their acute episodes. However, few studies have been done on the treatment cost of chronic bronchitis using national data. We conducted a retrospective analysis of claims for patients treated for acute exacerbations of chronic bronchitis (AECB) to assess the frequency of services rendered and the costs to the health care system. Records were selected for the study based on a primary diagnosis of AECB according to the International Classification of Diseases, Ninth Revision, code. Medicare was the primary source of data on patients aged > or =65 years; data from the National Healthcare and Cost Utilization Project, the National Ambulatory Medical Care Survey, and the National Hospital Ambulatory Medical Care Survey were used for patients aged <65 years. We calculated a total treatment cost of $1.2 billion for patients aged > or =65 years and $419 million for patients aged <65 years. These calculations were based on the following: 280,839 hospital discharges resulting in hospital costs of $1.1 billion for the 207,540 patients aged > or =65 years, and $408 million for the 73,299 patients aged <65 years. The mean hospital length of stay was 6.3 days with a mean cost of $5497 for patients aged > or =65 years and 5.8 days with a mean cost of $5561 for younger patients. Room and board represented the largest percentage of the mean hospital costs of AECB. Inpatient physician services cost $32 million and $11 million for the 2 age groups, respectively. Diagnosis-specific data for outpatient services were found to be less reliable than inpatient data, possibly due to diagnostic coding omissions; 331,000 outpatient office visits for AECB were found for those aged > or =65 years and 237,000 visits for those aged <65 years, resulting in respective total outpatient costs of $24.9 million and $15.1 million. If the number of outpatient visits remain consistent with 1994 levels, there would be 5.8 million visits annually for those aged > or =65 years and 4.2 million visits for those aged <65 years; total outpatient costs would be $452 million and $317 million, respectively. Because the treatment costs of AECB are largely the costs of hospitalization, any new therapy that allows more patients to be treated in the outpatient setting is likely to generate significant savings.