This is a six-year longitudinal study to determine if the treatment of alcoholism as a primary diagnosis results in a reduction of total health care cost and/or utilization for the alcoholic as well as other nonalcoholic family members. All health care costs and utilization were tracked for a group of 90 families, representing 245 individuals, enrolled with Blue Cross/Blue Shield through the Health Benefits Division, California Public Employees Retirement System. At least one member in each family received treatment under a specific diagnosis of alcoholism from July 1, 1974 to December 1, 1975. All health care utilization and costs were obtained for a 12-month period before initial treatment for alcoholism and up to July 1, 1979. In addition, a matched group of 83 comparison families with no alcoholic members and covering 291 persons was selected to reflect family composition, age, and sex. Total health care data were obtained over the same time period for these families. The results indicated that utilization and costs of all forms of inpatient care for both nonalcoholic family members as well as alcoholic family members dropped after alcoholism treatment began and ultimately reached a level similar to the matched comparison group. On the average, outpatient care also decreased in terms of frequency and costs for all members of the alcoholic's family; and in similar fashion converged in the fourth follow-up period to the matched comparison families. Total health care costs per family member decreased substantially over time following initiation of treatment of the alcoholic family member. The findings support the contention that the direct treatment of alcoholism can yield significant reductions in total health care costs and utilization not only for the alcoholic but his/her family members as well.