BACKGROUND: Adolescents who attend 12-step groups following alcohol and other drug (AOD) treatment are more likely to remain abstinent and to avoid relapse post-treatment. We examined whether 12-step attendance is also associated with a corresponding reduction in health care use and costs. METHODS: We used difference-in-difference analysis to compare changes in seven-year follow-up health care use and costs by changes in 12-step participation. Four Kaiser Permanente Northern California AOD treatment programs enrolled 403 adolescents, 13-18-years old, into a longitudinal cohort study upon AOD treatment entry. Participants self-reported 12-step meeting attendance at six-month, one-year, three-year, and five-year follow-up. Outcomes included counts of hospital inpatient days, emergency room (ER) visits, primary care visits, psychiatric visits, AOD treatment costs and total medical care costs. RESULTS: Each additional 12-step meeting attended was associated with an incremental medical cost reduction of 4.7% during seven-year follow-up. The medical cost offset was largely due to reductions in hospital inpatient days, psychiatric visits, and AOD treatment costs. We estimate total medical use cost savings at $145 per year (in 2010 U.S. dollars) per additional 12-step meeting attended. CONCLUSIONS: The findings suggest that 12-step participation conveys medical cost offsets for youth who undergo AOD treatment. Reduced costs may be related to improved AOD outcomes due to 12-step participation, improved general health due to changes in social network following 12-step participation, or better compliance to both AOD treatment and 12-step meetings.