Luxembourg devotes large financial resources to health care, offering nearly unrestrained access to a modern medical system. Despite comprehensive coverage, the health status of the population is only average by international comparison. Quality indicators also lag behind those of best-performing countries and patients do not appear overly satisfied. At present, the health care insurance system is close to financial balance, thanks to rising prime-age cross-border workers, who rejuvenate the demographic structure by around three years. Yet, spending growth is set to accelerate with the graying of the population. Between 2005 and 2050, health and long-term care public spending is projected to increase from 7% of GDP to almost 14% of GDP in the absence of restraining measures, which would put Luxembourg among the largest health care spenders in the OECD. Therefore, the challenges facing policymakers are both to increase the quality and the cost efficiency of health services. There is no simple policy to address these challenges and reforms in various directions will be needed, such as more preventive care. A policy that is likely to bring significant payoffs is to encourage the sickness funds to act as “wise” buyers of services, rather than mere payers. For instance, they should make more frequent use of cost-efficiency analyses of services rendered and encourage accountability in order to allow patients to make more informed choices and to seek care in hospitals or ambulatory care where quality is combined with cost consciousness. This would imply removing barriers to seeking care from hospitals in neighbouring countries, which have generally lower costs. Paying for hospital services on the basis of output-related activity would go in this direction. Finally, patients could become more responsible users of health care services if their co-payments were raised where appropriate.