This policy brief presents the first national analysis of Medicaid health care spending on children in foster care and children adopted from foster care. According to data from the Medicaid Statistical Information System, states spent approximately $3.8 billion of Medicaid on 869,087 foster and adopted children in federal fiscal year 2001. The brief documents the types of services most commonly received by foster children and the amount states expended on these services. The brief also highlights variation in spending across states; among children of different genders, ages, and races; and among children receiving and not receiving capitated health care services.