Lower extremity peripheral arterial disease (PAD) is prevalent in the Medicare population and is associated with high rates of myocardial infarction, stroke, amputation, and death. Nevertheless, national health expenditures for PAD are not known. We hypothesized that PAD-related costs are high, increase with age, and that treatment rates would be less than known PAD prevalence. The objective was to determine national health care expenditures for PAD in the United States. PAD-related treatment costs were calculated in the elderly, non-disabled Medicare population. The cost analysis relied on the 5% control population for the linked SEER-Medicare data and Medicare claims for the calendar year 2001, identifying PAD cases based on diagnosis and procedure codes. Costs were aggregated separately for inpatient and outpatient treatment and estimates adjusted to reflect the Medicare population. A total of $4.37 billion was spent on PAD-related treatment and 88% of expenditures were for inpatient care. Medicare program outlays totaled $3.87 billion, while enrollees (or their supplemental insurance) spent the remaining $500 million. In total, 6.8% of the elderly Medicare population received treatment for PAD. Treatment increased with age at rates of 4.5%, 7.5%, and 11.8% for individuals aged 65-74, 75-84, and >85 years, respectively. PAD-related costs accounted for approximately 13% of all Medicare Part A and B expenditures for the PAD-treated cohort, and 2.3% of total Medicare Part A and B expenditures. In conclusion, US national PAD-related costs are high, associated with inpatient care, and increase with age. PAD is treated at rates lower than the known PAD prevalence as only approximately one-third of the population with known PAD had detectable PAD-related health care costs in our analysis. The potential impact of earlier PAD detection and use of outpatient preventive strategies on total national PAD health care costs is unknown.