An important question for managed care organizations is whether insomnia is associated with increased consumption of healthcare resources. Even though a large number of adults complain of insomnia, few actually receive a diagnostic code for the condition. Consequently, it has been challenging to consistently measure both direct medical costs and indirect costs attributable to insomnia. Recent data have provided a clearer picture showing that insomnia is a costly medical condition. This paper summarizes current understanding of the prevalence of insomnia and explores its impact on health-related quality of life, workplace productivity, and healthcare resource utilization.