Understanding China as a de facto federalism can generate explanations and recommendations concerning the path of China's health reform. The first section reviews how de facto federalism drove the historical development of the problems plaguing China's health system. The next section shows how certain features of the current reform plan, namely, the plan's ambivalence between government and market approaches and its lack of strong centralisation, can be explained by de facto federalism. The third section uses the hypothesis of de facto federalism to generate two courses of action — one cautionary; the other, aspirational — that could be considered for the future. The consequences for the health sector of under-articulated federalism are clarified and point to the need for discursive reasoned elaboration, as opposed to political bargaining alone, in federalism.