Transformation of the health care system was a task faced by all formerly socialist Central and Eastern European countries. The years of changes revealed a large number of problems, including those induced by the limited capacity of governments to formulate and implement health care reforms. The goal of this article is to reflect the Czech situation. We start by summarizing the historical development of the Czech health care system in the context of government capacity for implementing health policy. In the core parts of this article, we highlight the main features of Czech health policy making and implementation and present an in-depth analysis of two selected country-specific issues - a low level of patient co-payments and a pluralistic insurance-based financing of health services.