The objective of this study was to examine the total cost to Medicare associated with the presence of anemia in congestive heart failure (CHF) patients. International Classification of Diseases, Ninth Revision, Clinical Modification codes were used to identify anemia, CHF, and comorbid conditions in 2002, and total Medicare costs were calculated for 2003. The mean patient age was 77.8 years. Anemia, present in 32% of CHF patients, was associated with older age, female sex, non-white race, and increasing burden of comorbidity. The total per-member-per-month cost in 2003 was $1781.01 among CHF patients with anemia in the preceding year compared with $1142.38 for CHF patients without anemia, a ratio of 1.56 (95% confidence interval, 1.5589-1.5592). When adjustment was made for baseline demographic factors and comorbid conditions, the corresponding ratio was 1.25 (95% confidence interval, 1.2546-1.2548). Anemia, a common association of CHF in elderly patients, is an antecedent association of increased societal medical expenditure.