The report examines chronic illness in children and considers issues and recommendations for change in public policies and programs affecting chronically ill children and their families. The background chapter notes the significance of the problem, reviews 11 diseases that are representative of the severe chronic illnesses of childhood: juvenile onset diabetes, muscular dystrophy, cystic fibrosis, spina bifida, sickle cell anemia, congenital heart disease, chronic kidney disease, hemophilia, leukemia, cleft palate, and severe asthma. These conditions serve as "marker" diseases, i.e., they have characteristics that make them representative of the total range of such illnesses. Definitions of chronicity and severity are also considered in the background section. Section 2 focuses on the organization, costs, and financing of health care services for chronically ill children. A brief section on public policy principles concludes that policies should be designed to help families carry out their responsibilities to nurture their children and encourage their development. The fourth section advocates the establishment of a regional program that emphasizes comprehensiveness of service, coordination, continuity, and communication. The concluding section examines issues and recommends changes in the health care system regarding organization and financing of services, schools, research, and training of service providers. (CL)