Disability is discussed in terms of three categories: conditions that result from biomedical conditions and chronic, lifelong illnesses; role or social functioning difficulties that result from behavioral, developmental, or brain disorders; and conditions that limit physical functioning. The range and depth of services needed by the disabled result in higher costs of health care for this population. Because their service needs vary so widely, no single program can address all of the needs equally. Currently, no integrated public policy or program is specifically designed to serve people with disabilities. Rather, they are served by a range of programs that provide specific benefits (e.g., health, social services, and income). Section 1 of this chapter provides an overview on extending the concept of managed care to disabled populations. Special attention is paid to the financing of health care, the delivery of care, reforming the health care system, the cost-containment potential of managed care, and the need to align care with the nature of the individual disability. In sections 2 and 3, the current status of managed care for two special populations--children and the mentally ill--is discussed in greater detail. Section 2 addresses the characteristics of chronically ill and disabled children, public and private health insurance coverage of children with disabilities, other public programs for chronically ill children, and current directions and strategic choices for managed pediatric care. Section 3 describes the mentally ill and the system of providers that currently supplies care to them, offers some conclusions regarding how managed care is changing the policy debate in mental health care, assesses the key factors affecting policy choices in managed care, and considers prospects for the future shape of managed behavioral health care.