The objective of this study was to compare the health care costs of adults with Medicaid aged 19 to 65 years (n = 29,680) and adults in the same age range with commercial insurance (n = 29,680) who were members of the same health maintenance organization between 1996 and 1998. After adjusting for age and sex, income-eligible Medicaid-insured adults were $35 (29 percent) per month more expensive than commercially insured adults. The medically needy/indigent (excluding "spenddown") were $61 (51 percent) per month more expensive than commercially insured adults, and the blind or disabled were $289 (240 percent) per month more expensive. When the analysis adjusted for health status as well as age and sex, however, income-eligible Medicaid adults were $12 (p = 0.01) per month less costly than commercially insured adults. The costs of Medicaid-insured adults were substantially higher than those of commercially insured adults; these differences were likely due to higher rates of pregnancy and to worse health status among the Medicaid cohort.