This article analyses the pre-reform Polish healthcare system, the theory of the recent reform, the early experiences, and the likely future developments. The reform aims to preserve a state-guaranteed egalitarian healthcare system while ensuring optimal use of resources by the introduction of market-type mechanisms. These mechanisms cannot function as intended while sub-national governments, which have little incentive to support restructuring, remain a vital part of the system. An even greater impediment to the proper functioning of the system is the practice of informal payments. Therefore, smaller than expected gains in efficiency and equity, together with demographic and technological pressures on health costs and a political and economic climate which is unlikely to deliver large increases in public spending, are likely to result in a more privatised and unequal health system than is intended.