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Compared to usual obstetrical care, care by midwives at a birth center could reduce costs to the Medicaid program. This article examines whether such care reduces Medicaid costs for low income women using results from a prior study of maternal and infant outcomes at the Family Health and Birth Center in Washington, D.C. Costs to Medicaid are derived from birth center data and from national sources. Birth center care could save an average of $1,163 per birth. Policy makers should consider a larger role for midwives and birth centers in maternity care for low-risk pregnant women with Medicaid.