OBJECTIVE: The use of cardiac stents is an example of a technology with both widely discussed cost concerns and widely adopted use. We examined trends in Medicare spending overall and for cardiac services from 1995 to 2000 to examine systematic response to the adoption of this new technology. METHODS: We used all Medicare hospitalizations from 1995 through 2000. Cases were identified for: percutaneous transluminal coronary angioplasty (PTCA), stent use, and coronary artery bypass graft (CABG) surgery. The number of cases, length of stay (LOS), costs, and total payments were calculated. All dollar amounts were inflated to 2001. RESULTS: Stent use in PTCA increased from 37% in 1996 to 85% in 2000. The number of PTCAs increased by 91500 (46%) from 1995 to 2000 and the number of CABG increased by 2350 (1.3%). The combined rate for PTCA and CABG was 12.0 per thousand beneficiaries in 2000, an 18.3% increase since 1995. At $3,000 per case, the cost for stents was $740 million in 2000. LOS and cost for all PTCAs decreased from 4.8 days to 3.7 days, and from $14900 to $13100. The cost of CABG decreased by $3355 per case. The cost per beneficiary for PTCA and CABG remained nearly constant and inpatient cardiac care decreased from $756 per beneficiary in 1995 to $698 in 2000. While changes following 1996 cost $1.1 Billion for stents, other changes in the system saved $6.3 Billion. CONCLUSIONS: While the introduction of stents into common practice for cardiac care added new costs, compensating changes was induced in the system resulted in substantial savings. The direct cost of new technologies is a poor measure of expected system performance. Balanced examination of system costs and clinical performance are necessary to avoid irrational fear of short-term costs at the expense of long-term cost and care improvements.