OBJECTIVE: To estimate the annual excess cost of chronic obstructive pulmonary disease (COPD) to a large managed-care plan. METHODS: This study employed a retrospective, matched cohort design and administrative claims data from the large multi-state managed care database. Patients selected were 35 + years of age, with a diagnosis of COPD in 2001, and eligible for medical and pharmacy benefits as of January 1, 2001. The comparison cohort consisted of patients without COPD matched on age, gender, geographic region, and insurance coverage type. The excess cost of COPD was estimated as the difference in mean health plan payments between the COPD and comparison cohorts during 2001. Multivariate techniques were employed to assess the contribution of mortality and comorbidity to excess costs. RESULTS: A total of 61,527 patients with COPD met study inclusion criteria, a prevalence of approximately 9%. Approximately 12% were diagnosed with emphysema, 25% with chronic bronchitis, and 63% with unclassified chronic airway obstruction. COPD patients and their matched controls (n = 61,527) averaged 71 years of age and 50% were female. Charlson comorbidities, especially vascular disease and cancer, were more common in the COPD cohort. The utilization of most types of services was significantly (P <0.001) higher in the COPD group, including hospitalizations (43% vs. 14%), emergency room visits (47% vs. 21%), and home health-care services (28% vs. 8%). The annual per-patient excess cost of COPD from the health plan perspective was estimated to be approximately $7900 ($11,350 for the COPD cohort minus $3450 for the control cohort), 58% of which was due to hospitalizations. The higher burden of comorbidity and mortality in the COPD cohort accounted for about 40% of the observed difference in excess costs. CONCLUSIONS: The excess cost of COPD is substantial. Acute hospitalizations and greater comorbidity burden explain a large portion of these excess costs.