Prologue: As health maintenance organizations (HMOs) have flourished as an alternative to traditional means of delivering and paying for health care, so too has the body of federal and state regulation governing them. In the early years of HMOs, most regulation concerning them did little to restrict their function, since they were viewed as a market-based solution to competitive pressures in the health care arena—a trend that was encouraged in the antiregulatory climate of the 1980s. More recently, in the wake of the failure of several large HMOs with nationwide membership, state regulations have placed more restrictions on HMOs, In this paper, Jon Christianson, Douglas Wholey, and Susan Sanchez discuss several policy issues relating to HMO regulation at the state level. Should HMOs be subject to the rulings of state regulators or federal courts? Does the frequency of HMO failures justify increased regulatory attention? Are the added costs that generally accompany HMO regulations justified, or will they n...