Although the State Children's Health Insurance Program (SCHIP), in operation for 5 years, has made rapid progress in reducing the number of children in the United States without health insurance coverage, pending reductions in federal funding, the expected reversion of SCHIP funds back to the U.S. Treasury, and growing state budget crises will likely reverse program enrollment and increase the number of uninsured children. This special report describes the SCHIP, discusses the problems contributing to the anticipated drop in SCHIP enrollment, and delineates the anticipated loss of funds for each state and the nation. Case studies are presented to illustrate three strategies used by states to curb spending: (1) freezing enrollment or limiting time periods during which children can enroll; (2) increasing family premium requirements, thereby making program participation less affordable; and (3) undoing eligibility and enrollment simplifications that make it easy for families to enroll and stay enrolled. It is concluded that the loss of approximately $6 billion in federal SCHIP funding is projected to cause 900,000 low-income enrollees to lose health coverage in the near future. Congress is urged to address existing flaws in the federal funding mechanism. (Contains 54 endnotes.) (KB)