Managed care is a new concept for many health policymakers. Developed in the USA as a response to increasing healthcare costs, it is being exported across the world, and many countries are incorporating elements of managed care into their health systems. In the absence of a basic understanding of managed care, reality may not meet expectations. This article explains what managed care is, traces its development in the context of the American healthcare system, discusses its achievements (or lack thereof) to date and considers its relevance to healthcare delivery in India.