There is increasing interest in the application of managed care principles to the management of child welfare services. Interest to date has focused on application of these management tools to child welfare populations in the most costly segments of out-of-home care. This article is based on a review of the managed care evaluation literature and information gathered from child welfare administrators in California. The authors argue that there is limited empirical support for the wholesale adoption of managed care principles to child welfare and numerous reasons for concern including a lack of understanding of the essential features of managed care by public sector administrators, limited child welfare risk assessment capabilities, the pervasive role of the courts regarding placement decisions, very limited child welfare management information system capabilities, and the coercive nature of child welfare services. A more incremental approach to evaluating the promise of managed care principles in child welfare settings is urged. Essential policy and administrative issues are identified for further debate.