States are in a difficult position. Health care costs are spiraling up and becoming increasingly unaffordable for consumers and businesses. Yet political and practical barriers constrain the government’s ability to contain health care costs through traditional regulatory channels. This Essay explores how some states have tried to maneuver around these constraints and contain costs through their contracts with health insurers and providers. We focus on three examples of state influence: health-insurance marketplaces, market-based public health insurance options, and state employee health plans. The Essay examines the impacts and limitations of state purchasing activities vis-a-vis regulatory alternatives, and discusses the opportunities and challenges that states face containing costs as purchasers. It ultimately finds that contracting solutions offer only modest political benefits over traditional regulatory approaches, and are significantly limited by consolidation in the health care provider market. Further, state officials may be hesitant to wield their market power to extract cost savings if it might result in fewer choices for consumers. However, these measures can achieve incremental savings in the right circumstances and, in the face of strong political opposition to broader health care reforms, states will need to use all levers available to hold the line on health care costs until more legislative breakthroughs can be made.