The research focused on these children's Medicaid experience during their first 2 years of life. The study also included a randomly sampled comparison group of 15,814 Medicaid children in California without identified drug exposure problems. Data came from the Medicaid database and California statistics. The analysis used a broad definition of drug or alcohol exposure to identify 8,662 children, of whom 7,802 were included in the analysis. Results revealed that the average Medicaid expenditure per drug-exposed child was $2,285, compared to $1,551 per child for the other children, over the 2 years. Much of this difference resulted from longer average lengths of enrollment for the study group, not greater health care needs. The drug-exposed children were also more likely to have low birth weights than other Medicaid children. Findings indicated that the effects of drug exposure were extraordinarily complex. Tables, figure, footnotes, and 27 references