This assessment of Medicaid's Early Periodic Screening, Diagnosis and Treatment (EPSDT) program for children, based on a 2-year survey of national data and a study of EPSDT programs in five states (Michigan, Mississippi, New Jersey, New York and South Carolina), documents inadequate health resources for low-income children and their families. The study of five state programs, focusing on one county in each state, included examination of available data, visits to study sites and talks with a wide range of program personnel. Major aims of the study were to determine (1) to what extent EPSDT is providing poor children with adequate health care, (2) what improvements are needed, and (3) what the implications of EPSDT are for designing a national health insurance program. The document presents the background of the Medicaid program and its EPSDT component, which requires the provision of EPSDT services to all children (under 21) eligible for Medicaid. Questions of administration and enforcement are examined, and detailed findings and recommendations are presented on: outreach needs and methods; screening, diagnosis and treatment; developmental assessment; and ways of linking children to an ongoing source of primary health care. The report finds that too few of the program's intended recipients are being adequately served. Recommendations are presented for changes in EPSDT and for a national health insurance program to eventually supersede it. (BF)