This study offers insights into the impact of competition among Managed Care organizations (MCOs) on infant birthing charges and birth outcomes. Kentucky provides one of the nation’s first case studies to determine successes and failures of Medicaid MCOs, and by doing so, provides a prediction of the impact of Patient Protection Affordable Care Act (PPACA) competition on healthcare costs and birth outcomes. An analysis of a natural policy experiment in the state of Kentucky reveals that infants insured by a Medicaid MCO stay longer in hospitals, are less healthy, and cost more than those insured under Traditional Medicaid prior to a policy change. Utilizing a difference-in-difference-in-difference (DDD) estimation, this study found initial evidence in a competitive MCO environment of Traditional Medicaid average birth charges substantially more than births under a Medicaid MCO, while outcomes also revealed the incidence of normal delivery increased almost identical to that of private insurance. However, after a short time, average birth charges for infants born under Medicaid MCO climb higher than other payer-types and infant health begins to decline. Outcomes of this study signal that Managed Care infants are actually less healthy and cost substantially more than anticipated but it is possible that these outcomes can be attributed to insurance selection.