<p>A small but growing population of children with medical complexity, many of whom are covered by Medicaid, accounts for a high proportion of pediatric health care spending. We first describe the expenditures for children with medical complexity insured by Medicaid across the care continuum. We report the increasingly large amount of spending on hospital care for these children, relative to the small amount of primary care and home care spending. We then present a business case that estimates how cost savings might be achieved for children with medical complexity from potential reductions in hospital and emergency department use and shows how the savings could underwrite investments in outpatient and community care. We conclude by discussing the importance of these findings in the context of Medicaid's quality of care and health care reform.</p>