There has been considerable debate on the cost-effectiveness of bariatric surgery within larger population groups. Despite the recognition that morbid obesity and its comorbidities are best treated surgically, insurance coverage is not universally available. One of the more costly comorbidities of obesity is Type II diabetes mellitus (T2DM). We propose a model that demonstrates the cost-effectiveness of increasing the number of bariatric surgical operations performed on patients with T2DM in the United States. We applied published population cost estimates (2012) for medical care of T2DM to a retrospective cohort of morbidly obese patients in South Carolina. We compared differences in 10-year medical costs between those having bariatric surgery and controls. Resolution of T2DM in the bariatric cohort was assumed to be 40 per cent. Considering only the direct medical costs of T2DM, the 10-year aggregate cost savings compared with a control group is $2.7 million/1000 patients; the total (direct and indirect) cost savings is $5.4 million/1000 patients. When considering resolution of T2DM alone, increasing the number of bariatric operations for a given population leads to a substantial cost savings over a 10-year period. This study adds to the growing body of evidence suggesting that bariatric surgery is a cost-effective means of caring for the obese patient.