To reduce racial and ethnic disparities in health care, managers, policy makers, and researchers need valid and reliable data on the race and ethnicity of individuals and populations. The federal government is one of the most important sources of such data. In this paper we review the strengths and weaknesses of federal data that pertain to racial and ethnic disparities in health care. We describe recent developments that are likely to influence how these data can be used in the future and discuss how local programs could make use of these data.