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The European Union is at a critical juncture in its history, not only in relation to the proposed constitution and planned enlargement, but also with respect to engagement with health and social issues. This publication provides an overview of health policy development within the European Union and the implications for Finnish health policies. Health is currently on the agenda in several spheres of social and health related policies in the European Union but with little integration or coherence of orientation. However, many of these processes may be catalyzed in the build up towards the Intergovernmental Conference in Spring 2004. In contrast to the hopes of mainstreaming health into other policy areas outlined in the Maastricht and Amsterdam amendments to the Treaty on European Union, there are concerns that the current vision of the future emphasizes the ways in which health policy issues are subsumed by internal market regulations and serving economic and trade priorities. Europe is changing and requires change in the ways in which national health systems are considered. European policies can no longer be seen as complementary or international, but need to be seen as a necessary part of the national policy environment. Understanding European policies can thus be seen as a prerequisite for ensuring that national health systems can operate in ways which are conducive to universality, financial sustainability and solidarity. Writing about health policy development within the European Union requires the capturing of a moving target due to the ongoing processes relevant to health. This publication has been updated in January 2004. It deals first with the competence of the European Union in health matters and then proceeds to the dilemmas concerning the impact of the single market on health systems and the European Union public health programme. The next section covers later development under the theme Europe of health and the impact of European social model on health policies. The final section of the publication explores the work of the Convention and issues concerning the draft constitution. In the annexes we present background information on European Union, legislation in health and examples of European Court of Justice judgments in health.