As states face increasing fiscal pressures, many are considering proposals to cut eligibility levels, eliminate outreach, and retract simplified enrollment procedures for children and families eligible for Medicaid and the State Children's Health Insurance Program (SCHIP). This paper presents evidence on the importance of maintaining gains made in the number of children and families enrolled in these programs and of building further on improvements in Medicaid and SCHIP coverage. Following an executive summary are introductory remarks detailing the phased-in eligibility expansions for Medicaid and the enactment of SCHIP, the increased program participation, and the potential risk to coverage gains due to proposed state actions. The paper is then organized in two major parts. Part 1 examines research evidence on how public health insurance coverage enhances access to care, health, family finances, and quality of life. Part 2 examines evidence on Medicaid and SCHIP's importance to communities, focusing on economic, health, and social consequences of public health insurance coverage beyond the target population. Among the key findings presented are that previously uninsured children enrolled in Medicaid have fewer unmet needs and fewer delays in getting needed care. Medicaid reduces emergency room use and the rate of preventable hospitalizations. Medicaid expansions are related to reduced infant mortality. Low-income families of children enrolled in Medicaid spend considerably less out-of-pocket than families of uninsured Medicaid-eligible children. Medicaid brings federal matching funds into states, thereby promoting community economic development through job creation and income growth. Public coverage reduces uncompensated care burdens on providers and localities, thereby strengthening local providers capacity to serve all people; and provides access to care for low-income children and parents at risk of communicable disease, thereby reducing burdens on public health departments to provide medical services to the uninsured. The paper concludes by pointing out that research findings provide an objective foundation for state policymakers to evaluate the potential consequences of their choices. (Contains 70 references.) (KB)