the combined role as purchaser and provider at the municipality level is also proposed as important for the resource allocation within the health sector the paper argues for a closer analysis of the impact of fundholding contractual relations and incentives between levels of governments as well as including qualify indicators in the efficiency measure these factors imply that a continued growth in health expenditure may increase social welfare some measures can be explored to decrease the burden of financing and to improve welfare for a given level of expenditure in the medium run the demand for health care can be crucially influenced by the encouragement of a healthy life style as discussed by bolin and by asgeirsdottir it is not clear how effective policies should be designed