The growing awareness that managed care is rapidly unraveling has not only produced a good deal of alarm, but also a call for prognostications regarding the future. Unfortunately, old habits die hard, and wedded ideologies die even harder. Instead of paving the way for innovation, most managed care pundits refuse to read the tea leaves properly and acknowledge that the orthodox regime is irretrievably comatose. Not understanding the fundamental flaws inherent in the old model, many persevere with rehashed predictions that only echo the very non-starters that got us in the present jam in the first place. Managed care has so far focused its energies on integrating the wrong objects, insurance and care, with all the predictably bad effects. Part 2 of this article will explore what this means and introduce the global theory of managed care as an alternative vision. Global theory lays a new foundation based on a more sound microeconomic model of risk, bifurcated markets, global fees for integrated episodes of care, and most important of all, patient/physician sovereignty.