The nation continues its ceaseless struggle with the spiraling cost of health care. Previous efforts (regulation, competition, voluntary action) have included almost every strategy except clinical. Insurers have largely failed in their cost-containment efforts. There is a strong emerging body of literature that demonstrates the relationship between various clinical strategies and reductions in utilization and costs. This article describes the organization of health services, including integration of delivery and financing systems, at the community level as a model that effectively addresses the critical structural flaws that have frustrated control of costs. Community-based health plans (CHPs) have been developed and have demonstrated viability. The key elements of CHPs are a legal organizational structure, a full provider network, advanced care-management systems, and the ability to assume financial risk. Common misconceptions regarding obstacles to CHP development are the complexity of the undertaking, difficulty assuming the insurance function, and insured pools that are too small to be viable. The characteristics of successful CHPs and 2 case studies are described, including the types of advanced care-management systems that have resulted in strong financial performance. The demonstrated ability of CHPs to establish financial viability with small numbers of enrollees challenges the common assumption that there is a fixed relationship between health plan enrollment size and financial performance. Organizing the health system at the community/regional level provides an attractive alternative model in the health-reform debate. There is an opportunity for clinical systems and state and federal leaders to support the development of community-based integrated delivery and financing system models that, among other advantages, have significant potential to modulate the pernicious cost spiral.