This study describes changes in the use of inpatient mental health services by children and adolescents under age 18. The data were insurance claims from the Blue Cross and Blue Shield Federal Employees Program. The study focused on a cut in inpatient benefits that occurred between 1978 and 1983. The rate of inpatient hospitalization dropped significantly, and the average number of days also decreased significantly from 45.8 to 27.0 days. This study is among the first to demonstrate that the rate and amount of inpatient care provided for children and adolescents is responsive to variations in benefit coverage.