We examined health literacy and health care spending and utilization by linking responses of three health literacy questions to 2006 claims data of enrollees new to consumer-driven health plans (n = 4,130). Better health literacy on all four health literacy measures (three item responses and their sum) was associated with lower total health care spending, specifically, lower emergency department and inpatient admission spending (p < .05). Similarly, fewer inpatient admissions and emergency department visits were associated with higher adequate health literacy scores and better self-reports of the ability to read and learn about medical conditions (p-value <.05). Members with lower health literacy scores appear to use services more appropriate for advanced health conditions, although office visit rates were similar across the range of health literacy scores.