Noting that there is a significant gap between the number of young children eligible for Medicaid and the number actually enrolled, this report describes a year-long effort to promote collaboration between local Head Start grantees and county Medicaid offices in New Jersey. The primary goal of the project was to define and implement policies and practices that streamline the enrollment of Head Start Children in Medicaid. The Head Start and Medicaid partnership in Newark, New Jersey, was used as the model. The project aimed to reduce the number of low-income preschoolers who either lacked health insurance benefits or who lacked comprehensive benefits and were, in effect, underinsured. Enrollment in Medicaid was also expected to improve access to health services for these children. Two very disparate groups worked to systematically establish better communication and a productive working relationship. This report describes the lessons learned from this process, the tangible accomplishments of the project, and several recommendations for state-level policy. A copy of a special report on the health of New Jersey's children is included. The report examines the health status and needs of New Jersey's children as well as some of the underlying problems contributing to poor access to care. It also traces key state proposals and legislation designed to address the health care needs of children in New Jersey. (AA)