BACKGROUND We wanted to examine the association between Medicaid managed care (MMC) and changing immunization coverage in New Mexico, a predominantly rural, poor, and multiethnic state. METHODS As part of a multimethod assessment of MMC, we studied trends in quantitative data from the National Immunization Survey (NIS) using temporal plots, Fisher’s exact test, and the Cochran-Armitage trend test. To help explain changes in immunization rates in relation to MMC, we analyzed qualitative data gathered through ethnographic observations at safety net institutions: income support (welfare) offices, community health centers, hospital emergency departments, private physicians’ offices, mental health institutions, managed care organizations, and agencies of state government. RESULTS Immunization coverage decreased significantly after implementation of MMC, from 80% in 1996 to 73% in 2001 for the 4:3:1 vaccination series (Fisher’s exact test, P = .031). New Mexico dropped in rank among states from 30th for this vaccination series in 1996 to 50th in 2001. A signifi cant decreasing trend (Cochran-Armitage P = .025) in coverage occurred between 1996 and 2001. Findings from the ethnographic study revealed conditions that might have contributed to decreased immunization coverage: (1) reduced funding for immunizations at public health clinics, and diffi culties in gaining access to MMC providers; (2) informal referrals from managed care organizations and contracting physicians to community health centers and state-run public health clinics; and (3) increased workloads and delays at community health centers, linked partly to these informal referrals for immunizations. CONCLUSIONS Medicaid reform in New Mexico did not improve immunization coverage, which declined significantly to among the lowest in the nation. Reduced funding for public health clinics and informal referrals may have contributed to this decline. These observations show how unanticipated and adverse consequences can result from policy interventions in complex insurance systems.