BACKGROUND: To assess the effect of gastric bypass surgery on the total cost of medical care for morbidly obese members compared with obese members and a general population. METHODS: We used an observational pre-post test design to analyze the administrative claim records of 224 gastric bypass patients during 3 periods (preoperative, surgical, and postoperative years) for a total of 7.5 years. The estimated future care costs for gastric bypass patients were determined from their preoperative cost trends, adjusting for the annualized actuarial trends. The general membership population actuarial trends and overweight/obese member medical expenditure data were used as comparison groups. RESULTS: The inflation adjusted mean per member per year total paid decreased by $1895 in the fifth year after surgery. The mean costs for gastric bypass patients were lower within the first year after surgery than their preoperative costs. At 3.5 years after surgery, the surgical costs had been recouped for patients undergoing gastric bypass surgery, and by year 2, they had incurred fewer costs than the obese health plan population. CONCLUSION: Although gastric bypass is a costly surgical procedure, the longitudinal costs savings and overall health improvement for patients undergoing gastric bypass surgery are cost-effective within a closed, experienced network. Weight loss surgery decreased the annual costs per patient in the years after surgery. The costs were slightly elevated in the fifth year after surgery because of maternity cases and orthopedic surgeries.