The persistent proximity of insulating and metallic phases, a puzzling characteristic of manganites, is argued to arise from the self-organization of the twofold degenerate e(g) orbitals of Mn into localized Jahn-Teller (JT) polaronic levels and broad band states due to the large electron-JT phonon coupling present in them. We describe a new two band model with strong correlations and a dynamical mean-field theory calculation of equilibrium and transport properties. These explain the insulator metal transition and colossal magnetoresistance quantitatively, as well as other consequences of two state coexistence.