While healthcare reform proposals are debated at the national level, states continue to propose and implement reform measures to address Medicaid, health insurance, universal coverage and access, medical liability, and cost-containment. The authors examine the shared responsibility of the federal and state governments for healthcare regulation and the surprising number of powers that reside with the states. They review the major barriers to state reform represented by restrictions within Medicaid and the Employee Retirement Income Security Act of 1974 (ERISA) legislation. Established state programs in Maryland, Hawaii, and Arizona are revisited, and innovative reforms in Oregon, Tennessee, and Washington are examined. Finally, the authors concentrate on the reform measures under way in the five most heavily DO-populated states, pointing out the potential for one of the big three (Michigan, Pennsylvania, and Ohio) to emerge as a model for the larger states. They urge osteopathic physicians to exert influence, based on their record of serving the Medicaid and other underserved populations, in state settings where they can be most effective.