This study developed methods and determined the impact of influenza vaccination on elderly persons in 3 large health plans: Kaiser Permanente Northwest, HealthPartners, and Oxford Health Plans. Data for the 1996-1997 and 1997-1998 seasons were extracted from administrative databases. Subjects were health plan members > or = 65 years old. Comorbid conditions collected from the preceding year were used for risk adjustment with logistic regression. The virus-vaccine match was excellent for year 1 and fair for year 2. Both years, during peak and total periods, vaccination reduced all causes of death and hospitalization for pneumonia and influenza: hospitalizations were reduced by 19%-20% and 18%-24% for years 1 and 2, respectively, and deaths were reduced by 60%-61% and 35%-39% for the same periods. These results show that all elderly persons should be immunized annually for influenza. The methods used in this study are an efficient cost-effective way to study vaccine impact and similar questions.