Government-funded health insurance programs that claim to provide comprehensive funding of their clients' demands have commonly adopted a purposive (deductive) approach to the problem of health care funding. This involves determining the extent of covered benefits by seeking an “ adequate” definition of health or health care. Payment is then limited to only those procedures medically required or indicated. In this paper we argue that the purposive approach is inadequate, and that attempted adherence to it results in a curious dislocation of service, serious inequities, and an unhealthy contemplation of the definition of health. These problems are the result of structural deficiencies in the approach, and so will not be rectified by tinkering with the definitions adopted. As an alternative, we present an outline of a functional (inductive) approach, which seeks to identify which of the expectations of its clients the government health insurance system may realistically satisfy.