OBJECTIVES: To assess the utilization and costs for medical resources and pharmacotherapy among patients with asthma in a state Medicaid population. METHODS: Outpatient, hospital and emergency department (ED) claims with a primary ICD-9 code for asthma (493.XX) dated between January 1 through December 31, 1999 were extracted from a state Medicaid claims database. Unique recipient identifiers obtained from these claims were then used to extract asthma-related prescription claims. Medicaid reimbursements were used to calculate costs for outpatient, ED and prescription drug use, and 1999 Medicare DRG reimbursement amounts provided by the Centers for Medicare and Medicaid Services (CMS) were used to calculate hospital costs. Based on the pharmacotherapy received, recipients were classified into one of four categories: 1) short-acting beta-agonist use only; 2) use of combination therapy without inhaled anti-inflammatory medications; 3) use of any inhaled anti-inflammatory therapy (inhaled corticosteroids, cromolyn, or nedocromil); or 4) no prescription claims for asthma-related medications. RESULTS: Overall asthma prevalence was 17.7/1000 Medicaid recipients. Of the 6051 recipients identified with asthma, 20.4% (n=1233) received short-acting beta-agonist therapy only, 34.8% (n=2108) received combination therapy without inhaled anti-inflammatory drugs, 35.9% (n=2170) received at least one inhaled anti-inflammatory drug, and 8.9% (n=540) had no prescription claims for asthma-related medications. The hospitalization rate was 21 hospitalizations/10,000 recipients at a mean cost of $3737 (SD=$1322) per visit per recipient (pvpr). The rates of outpatient and ED use were 21 outpatient visits/1000 recipients, and 69 ED visits/10,000 recipients. The mean cost pvpr for outpatient and ED use was $54 (SD=$72) and $101 (SD=$126), respectively. The total asthma-related expenditures to Medicaid were: $2,690,777 for hospitalizations; $236,857 for ED use; $589,878 for outpatient use; and $1,813,240 for prescription use. CONCLUSIONS: Asthma is responsible for a substantial economic burden to Medicaid, with hospital use accounting for most of the dollars.