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OBJECTIVE: To examine trends in mental health service use and cost among privately insured children. DATA SOURCES: Inpatient and outpatient claims from the MarketScan database, a collection of health care claims for a national sample of over seven million privately insured individuals. Claims were analyzed for all users of mental health services 17 years of age and under from 1993 to 1996. STUDY DESIGN: The proportion of children receiving mental health services and annual costs and treatment days per treated child were compared across diagnostic groups over time. PRINCIPLE FINDINGS: The proportion of covered children receiving any mental health services fell substantially (-30.0 percent). Inpatient mental health costs per treated child fell $4,587 (-46.9 percent) during the period, driven by decreases in the number of hospital days per treated child per year (-22.9 percent) and per diem costs (-14.5 percent). Outpatient mental health costs also fell during the period due to a 5.1 percent decline in the number of treatment days and a 25.9 percent fall in costs per day. Children whose primary diagnosis was hyperactivity experienced the largest decrease in inpatient costs per treated patient, those diagnosed with schizophrenia experienced the smallest decrease, and those diagnosed with substance abuse disorders experienced large increases. CONCLUSIONS: Changes in mental health service delivery have resulted in substantially reduced access to mental health care among children and significant declines in service use and costs among those who do receive services.