Hong Kong and Mainland China are undertaking health reform following recent economic fluctuations and Hong Kong's transformation to a Special Administrative Region of China in 1997. Despite spending only 4.7% of its Gross Domestic Product on health care, one third as much as in the United States, Hong Kong has developed health statistics comparable to those in leading western nations. In contrast, Mainland China's 3.6% of GDP expenditure on health is associated with health statistics and expenditures similar to those found in most developing countries. Hong Kong has adopted health care financing and organizational health systems that are commonly seen in centrally planned economies, while its economy functions as a highly capitalistic enterprise. In contrast, mainland China has integrated many features of health care systems associated with market economies, while its overall economy is largely centrally planned. In this paper we examine the policy factors associated with these disparate health systems and investigate whether they can be maintained according to the 'one country, two systems' approach that has been adopted by Chinese policy makers.