We present a combined physical and chemical modeling of the halos around molecular clouds, with particular emphasis on the H-to-H-2 transition. Based on H I 21 cm observations, we show that the halos are extended. A physical model is used in conjunction with a chemistry code, to provide a self-consistent description of the gas. The radiative transfer code provides a check with H I, CO, and OH observations. We conclude that the warm neutral halos are not gravitationally bound to the underlying molecular clouds and are isobaric. The vertical pressure distribution of the halo gas above the Galactic plane follows the e-(z/h)2 distribution expected for a gas in hydrostatic equilibrium. The pressure is larger than that previously inferred for the diffuse atomic gas, and the scale height is that of the molecular, rather than the atomic medium. Thus, unless there is some additional pressure component in the diffuse medium, they are likely to be expanding into the diffuse gas. This conclusion is in accord with earlier observations of the B5 cloud halo which appears to be expanding. Finally, the observed extent of the H I envelopes and the large observed abundance of OH in them imply that the generally accepted rate for H-2 formation on grains is too large by a factor of several. This conclusion is supported by recent theoretical work on H-2 formation.