Curbing the growth of public sector health expenditures has been the proclaimed government objective in Belgium since the 1980s. However, the respect for freedom of choice for patients and for therapeutic freedom for providers has blocked the introduction of microeconomic incentives and quality control. Therefore - with some exceptions, particularly in the hospital sector - policy has consisted mainly of tariff and supply restrictions and increases in co-payments. These measures have not been successful in curbing the growth of expenditures. Moreover, there remains a large variation in medical practices. While the structure of health financing is relatively progressive from an international perspective, socioeconomic and regional inequalities in health persist. The most important challenge is the restructuring of the basic decision-making processes; i.e. a simplification of the bureaucratic procedures and a re-examination of the role of regional authorities and sickness funds. Copyright (c) 2005 John Wiley & Sons, Ltd.