This paper examines the Norwegian health care system from an economic perspective. While acknowledging the excellent quality of services delivered by the Norwegian health care system, it identifies a number of problem areas, in particular: i) the long waiting lists for hospital admission and lack of medical staff; ii) the marked regional variation in per capita health care expenditure (which cannot be fully explained by demographic factors); and iii) the risks to cost control associated with soft budget constraints and collective wage bargaining of doctors. A series of recent reforms, most importantly a move from block grant to activity-based funding of hospitals, should provide incentives for raising efficiency in health care provision but also risk leading to “treatment inflation” ...