This article provides an overview of managed health care in the USA--what has been achieved and what has not--and some lessons for policy-makers in other parts of the world. Although the backlash by consumers and providers makes the future of managed care in the USA uncertain, the evidence shows that it has had a positive effect on stemming the rate of growth of health care spending, without a negative effect on quality. More importantly, it has spawned innovative technologies that are not dependent on the US market environment, but can be applied in public and private systems globally. Active purchasing tools that incorporate disease management programmes, performance measurement report cards, and alignment of incentives between purchasers and providers respond to key issues facing health care reform in many countries. Selective adoption of these tools may be even more relevant in single payer systems than in the fragmented, voluntary US insurance market where they can be applied more systematically with lower transaction costs and where their effects can be measured more precisely.