The state of Texas faces some challenges in maintaining resources for children with disabilities or chronic illnesses and requiring health care services beyond those provided in standard health care plans. Despite the broad array of services available through Medicaid, the Children's Health Insurance Program (CHIP), and the Children with Special Health Care Needs (CSHCN) program, Texas's capacity to serve children with special health care needs is limited. Several difficulties exist in providing insurance options to pay for needed services, service organization, family awareness of and role in service provision, and fund availability. This report delineates the key policy issues surrounding children with special health care needs in Texas. Following a formal definition of the various contexts of children with special health care needs and a summary of national program standards and the effects of children's health conditions on families, the services provided by the CSHCN program, Medicaid, CHIP and waiver programs in Texas are described. Existing and potential issues Texas faces in providing services to children with special health care needs are then identified. A brief overview of the CSHCN programs and initiatives in California, Connecticut and Florida is given to identify model elements Texas could adopt to benefit its programs. Finally, options for future special needs children's health policy development are presented.