States are often touted as “laboratories” for developing national solutions to social problems. In this article we examine the appropriateness of this metaphor for comprehensive health care reform and attempt to draw lessons about policy innovation from recent state actions. We present evidence from six states that enacted major pieces of health care legislation in the late 1980s or early 1990s: Massachusetts, Oregon, Florida, Minnesota, Vermont, and Washington State. The variation in design casts doubt on the proposition that states can invent plans and programs for other states and the federal government to adopt for themselves. Instead, we argue that it is more accurate to think of states as specialized political markets in which individuals and groups develop and promote innovative products. We examine the factors that might create receptive markets for comprehensive health care reforms and conclude that the critical factor these states shared in common was skilled and committed leadership from “policy entrepreneurs” who formulated the plans for system reform and prominent “investors” who contributed substantial political capital to the development of the reforms. We illustrate different strategies that leaders in these states used to carry out the entrepreneurial tasks of identifying a market opportunity, designing an innovation, attracting political investment, marketing the innovation, and monitoring its early production.