BACKGROUND Medicaid covers nearly 50% of all family planning services nationally. Between 1994 and 2001, 11 states implemented demonstration programs that expand coverage of family planning beyond the federally mandated minimum coverage levels. METHODS We estimate the effect of income- and postpartum-based eligibility expansions on birth rates using states that did not expand coverage as a control for states that did expand coverage. Our data span 1991-2001 and include all 50 states. We also estimate net expansion costs from societal and state perspectives for 5 expansions that published incremental expansion costs. RESULTS We find that Medicaid eligibility expansions lowered average annual birth rates in all states. Birth rates were reduced on average by 1.95 points in income-based expansions and by 0.87 points in postpartum-based expansions. The cost offset of maternal and child health expenditures of the expansions exceed program costs in all states but California. This result is likely because the objectives and scope of the California program goes beyond just unplanned births, which makes the program cost higher relative to the reduction in births. CONCLUSIONS Both income- and postpartum-based family planning expansions either yield financial benefits or, at the very least, are cost neutral from the perspective of state governments. Income-based expansions are significantly more effective because eligibility is not limited to only postpartum women. The experience of these early family planning expansions should be a guide for other states considering family planning benefit expansions. From the national perspective, 4 out of 5 programs were cost neutral, although California had significantly higher costs. From the state's perspective, all of the expansions were either budget neutral or yielded a net cost savings.