The most important reform in Finnish health care in the last decade occurred at the beginning of 1993 as part of a broader change to the entire state subsidy system. This reform reduced central government control and increased the freedom of the municipalities in the provision of health services. In addition, an unusually severe economic recession in the early 1990s affected Finnish health care. Currently, the most important economic decisions in the health care system are made by the 432 municipalities, which decide annually the amount of money to be devoted to health care as well as dividing resources in different sectors within the area of health. The changes in measures of productivity (based on activity-based measures in output) in the system are more closely associated with direct economic constraints (of municipalities) than with changes in financial incentive structures. Studies on equity in utilisation indicate that the Finnish health care system met the challenges of the 1991-1994 recession. Inequity in utilisation still prevails, however, and can be partly explained by the specific characteristics of the Finnish health care system. In future one needs to take more careful account of the rather unusual incentives that affect the behaviour of political decision-makers, providers and patients.