Proposals for government decentralization rank high on the political reform agenda of health systems worldwide. Their impact on welfare state performance and change, however, is still under theoretical scrutiny. This article examines the impact of devolution on the construction of the Spanish National Health Service (NHS) in an attempt to shed some light on this debate. Against widespread claims of path dependency, we argue that the specific nature of the devolution model developed in Spain, given the more egalitarian sociopolitical structure that resulted from democratization, fostered policy innovation and institutional change. Consolidation of an NHS system was compatible with some regional diversity and apparently prevented the rise of significant territorial inequalities. The Spanish case also suggests that policy change depends more on the distribution of social power than on institutions. It underlines the key role of financial and knowledge transfers vis-à-vis institutional reforms in effecting social change as well as the potential for state intervention in supporting the development of collective action resources by social groups.