This paper draws upon a paper entitled ` Refocusing and Reinvigorating Retirement Policy'', which I presented to the Conference of Major Superannuation Funds in Australia in 1999. It approaches the topic of health funding reform from a ` retirement policy'' perspective, noting that healthcare needs, like retirement income needs, are heavily concentrated in old age. In Australia, as in many other countries, the ageing of the population implies large future rises in health costs, a large proportion of which is publicly funded out of current taxes. This poses, inter alia, intergenerational equity issues, implying a signi®cantly heavier tax burden on the next generation for the support of the present one. How can these rising future costs be met more equitably and ef®ciently? Encompassing both income and health needs in old age in a single perspective also gives a fuller view of what makes up security in retirement for individual retirees. Security in retirement has a number of distinct and important elements. For example, the situations of two retirees with the same income will be very different if one is a home-owner and the other pays a market rental. So housing status is an important factor. Another very important factor to individuals is their health status, and how well they are covered for health costs, differences in which can imply very big differences in retirees' exposure to ®nancial risk, as well as in their quality of life. Those aspects are part of the motivation for exploring the question posed above, but the main focus is on the public policy dimension: how to ensure the ®nancial viability of the health system. In Australia, providing healthcare for the elderly in the future is now a considerably bigger issue for public policy, and a bigger challenge to future public budgets, than providing taxpayer-funded old age income support, through the age pension. The age pension is noncontributory, paid for out of contemporaneous general taxation, but is subject to a tight income and assets test. The full pension for a single person is about 25 per cent of average earnings. The key reason that the future cost of the age pension no longer poses a major challenge to public budgets is that Australia has a long tradition of funded occupational pensions, called ` superannuation'', in past decades covering about 40 per cent or so of the workforce, but now covering nearly every employee. Beginning in the mid-1980s superannuation was extended to virtually the whole workforce, on a de®ned contribution model.