This article illustrates the use of the directed dyad-year event history analysis to study policy diffusion, with an application to policy changes in the Children's Health Insurance Program from 1998 to 2001. This analysis reveals strong evidence that states with successful policies are more likely to be emulated than are those with failing policies. Evidence of success is especially relevant for policy changes that lower program costs rather than those raising costs, and for changes made by legislatures rather than by administrative agencies. Moreover, this study reveals policy diffusion based on political, demographic, and budgetary similarities across states, rather than simply geographic proximity.