BACKGROUND: Bipolar disorder is a chronic and costly condition. This analysis examines health care costs associated with bipolar disorder in 2004 and contrasts them with those for depression, a better understood mental illness. METHODS: Health care costs associated with bipolar disorder and non-bipolar depression were determined using private payer administrative claims. Individuals having 2 claims with a primary ICD-9-CM code for bipolar disorder or depression were categorized as bipolar disorder or non-bipolar depression patients, respectively. Comparisons between patient groups were adjusted for demographic differences and comorbid diagnoses. RESULTS: On average, bipolar patients (n=6072) used significantly more psychiatric resources per person than depression patients (n=60,643), and had more mean psychiatric hospital days, psychiatric and medical emergency room visits, and psychiatric office visits (p<.001 for all). Bipolar patients were slightly less likely to be treated with antidepressants, but substantially more likely to be treated with antipsychotics, anticonvulsants, lithium, and benzodiazepines (p<.001 for all). Mean direct per-patient costs were $10,402 for bipolar patients and $7494 for depression patients (p<.001), with the primary differences observed for psychiatric medication ($1641 vs. $507) and psychiatric hospitalization ($1187 vs. $241). LIMITATIONS: Patients were categorized based on diagnostic codes in administrative claims data, which may not always be accurate. Results may not generalize beyond private payer populations in the US. CONCLUSIONS: Bipolar disorder is associated with significantly greater per-patient total annual health care costs than non-bipolar depression, as well as significantly greater psychiatric costs. Bipolar disorder, a chronic condition often suboptimally treated, may represent a good target for disease-management programs.