A sample of 3,572 chemical dependency inpatients aged 25 to 82 years were the subjects of a study to evaluate whether observed reductions in health care costs are associated with successful recovery from alcoholism and other drug dependence, a function of regression to the mean, or ancillary health care during alcoholism/drug abuse treatment. The total number of hospital days were calculated for the year prior to treatment, and one and two years post-treatment. Utilization rates are not significantly different between recovering and relapsed patients prior to treatment; however, the differences between the two groups for the first and second year post-treatment are significant. The recovery patients showed a continued low utilization rate while the relapsed group had considerably higher utilization in both years. Recovery status is an essential factor to consider when determining valid cost-offsets for medical care utilization after alcoholism/drug abuse treatment.