The Children's Health Insurance Program (CHIP) in Arizona is called KidsCare. This report provides a portrait of children's health coverage in the state after a year of operation of KidsCare. Following an executive summary, the first section of the report presents overall statistics and trends in children's health coverage. The second section explores issues in employment-based health insurance, and the third section describes existing publicly-funded health care services for children in Arizona. Finally, the fourth section identifies the continuing gaps in children's health coverage (system gaps, population gaps, and service/coverage gaps) and provides recommendations to help close those gaps and reduce the number of uninsured children. A few of the recommendations are: (1) work to fully enroll eligible children in the available programs; (2) offer premium subsidies to families; and (3) maximize state health dollars by leveraging federal money to fund health coverage. (Contains 41 endnotes.) (EV)