OBJECTIVES: Asthma symptoms are adequately controlled in fewer than 25% of asthmatic children. The objective was to identify the determinants of severe exacerbation resulting in Emergency Department visits or hospitalization related to health status, socioeconomic status (SES) and drug insurance characteristics. METHODS: In this retrospective cohort study, data were collected on 522 asthmatic children in Toronto, Canada, regarding demographics, SES, drug plan characteristics, health status, health resource use and symptoms. Baseline data were linked deterministically to administrative data on asthma emergency visits and hospitalizations occurring in the year following baseline. Multiple Poisson regression was conducted to identify independent predictors of severe exacerbation in the full cohort and in a sub-group with prescription drug insurance. RESULTS: Younger age, prior emergency visits, nebulizer use, pet ownership, and receipt of asthma education, but no asthma action plan, were significant determinants of more frequent exacerbation. In the full cohort, children with high income adequacy had 28% fewer exacerbations than children with low income adequacy. In the sub-group with drug insurance, girls had 26% fewer exacerbations than boys, and children with food, drug or insect allergies had 52% more exacerbations than children without such allergies. Children of families with annual insurance deductibles greater than $90 had 95% fewer exacerbations. In addition, every percentage increase in the proportion of income spent out-of-pocket on asthma medications resulted in a 14% increase in severe exacerbations. CONCLUSIONS: Asthma history, disease management factors and SES were important determinants of severe asthma exacerbation in children. In families with drug plans, the magnitude of asthma medication cost-sharing as a proportion of household income, rather than income alone, was a highly significant determinant of severe exacerbation. This finding can inform drug policies aimed at reducing the negative consequences of cost-sharing.