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Background: The net economic value of increased health care spending remains unclear, especially for chronic diseases. Objective: To assess the net value of health care for patients with type 2 diabetes. Design: Economic analysis of observational cohort data. Setting: Mayo Clinic, Rochester, Minnesota, a not-for-profit integrated health care delivery system. Patients: 613 patients with type 2 diabetes. Measurements: Changes in inflation-adjusted annual health care spending and in health status between 1997 and 2005 (with health status defined as 10-year cardiovascular risk), holding age and diabetes duration constant across the observation period ("modifiable risk"), and simulated outcomes for all diabetes complications based on the UKPDS (United Kingdom Perspective Diabetes Study) Outcomes Model. Net value was estimated as the present discounted monetary value of improved survival and avoided treatment spending for coronary heart disease minus the increase in annual spending per patient. Results: Assuming that 1 life-year is worth $200 000 and accounting for changes in modifiable cardiovascular risk, the net value of changes in health care for patients with type 2 diabetes was $10 911 per patient (95% CI, -$8480 to $33 402) between 1997 and 2005, a positive dollar value that suggests the value of health care has improved despite increased spending. A second approach based on diabetes complications yielded a net value of $6931 per patient (CI, -$186 901 to $211 980). Limitation: The patient population was homogeneous and small, and the wide CIs of the estimates are compatible with a decrease as well as an increase in value. Conclusion: The economic value of improvements in health status for patients with type 2 diabetes seems to exceed or equal increases in health care spending, suggesting that those increases were worth the extra cost. However, the possibility that society is getting less value for its money could not be statistically excluded, and there is opportunity to improve the value of diabetes-related health care.