Kaiser report on effects of economic downturn: As the country experiences an economic downturn, many states appear headed for serious budget shortfalls. Economic hard times reduce state revenues and increase the number of people who qualify for Medicaid and the State Children's Health Insurance Program (SCHIP). However, without federal help many states may be forced to cut funds for Medicaid and SCHIP. Twenty-eight states are forecasting budget deficits totaling more than $39 billion, according to a new report from the Kaiser Commission on Medicaid and the Uninsured. Analyses in the report indicate that every 1% rise in the national unemployment rate will increase Medicaid and SCHIP enrollment by one million persons—600,000 children and 400,000 nonelderly adults. Medicaid and SCHIP costs would increase by $3.4 billion, of which $1.4 billion would be state funds. The 36-page report examines options that Congress may consider to better target federal relief to the states, such as increasing the federal Medicaid matching rate for a specified time. Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses is available on the Kaiser Foundation Web site at www.kff.org.