We determined the relationship of alcohol consumption and Medicare costs among 4,392 participants in the Cardiovascular Health Study (CHS), a longitudinal, population-based cohort study of adults age 65 or over in four U.S. communities. We assessed 5-year Parts A and B costs and self-reported intake of beer, wine, and liquor at baseline. Among both sexes, total costs were approximately $2,000 lower among consumers of > 1-6 drinks per week than abstainers. The lower costs associated with moderate drinking were most apparent among participants with cardiovascular disease (CVD) and for hospitalization costs for CVD among healthy participants. Former drinkers had the highest costs.