We retrospectively determined health care costs among veterans with multiple sclerosis (MS) and correlated the costs with neurologic dysfunction. Total health care costs for the 165 patients averaged $35,000/year. VA benefits and homecare together accounted for 85% of the total costs. Total health care costs correlated with two measures of neurologic dysfunction, the Expanded Disability Status Scale (EDSS) (r = 0.61, p < 0.001) and the Incapacity Status Scale (ISS) (r = 0.64, p < 0.001). The costs of VA benefits, homecare, and hospitalizations also correlated with the EDSS, ISS, and other measures of neurologic dysfunction whereas the cost of outpatient clinic visits did not. In a period of three years, there were 40 hospitalizations, at a total cost of $412,800, that were potentially preventable with appropriate outpatient management. Improving selfcare and avoiding preventable hospitalizations might lower the considerable health care costs of MS.