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Introduction: The aim of the paper is to examine the role of income inequality and redistribution for income-related health inequalities in Europe. This paper contributes in two ways to the literature on macro determinants of socio-economic inequalities in health. First, it widens the distinctive focus of the research field on welfare state regimes to quantifiable measures such as social policy indicators. Second, looking at income differences completes studies on socio-economic health inequalities, which often analyse health inequalities based on educational differences. Methods: Using data from the European Values Study (2008/2009), 42 European countries are available for analysis. Country characteristics are derived from SWIID, Eurostat, and ILO and include indicators for income inequality, social policies, and economic performance. The data is analysed by using a two-step hierarchical estimation approach: At the first step--the individual level--the effect of household income on self-assessed health is extracted and introduced as an indicator measuring income-related health inequalities at the second step, the country-level. Results: Individual-level analyses reveal that income-related health inequalities exist all across Europe. Results from country-level analyses show that higher income inequality is significantly positively related to higher health inequalities while social policies do not show significant relations. Nevertheless, the results show the expected negative association between social policies and health inequalities. Economic performance also has a reducing influence on health inequalities. In all models, income inequality was the dominating explanatory effect for health inequalities. Conclusions: The analyses indicate that income inequality has more impact on health inequalities than social policies. On the contrary, social policies seemed to matter to all individuals regardless of socio-economic position since it is significantly positively linked to overall population health. Even though social policies are not significantly related to health inequalities, the power of public redistribution to impact health inequalities should not be downplayed. Social policies as a way of public redistribution are a possible instrument to reduce income inequalities which would in turn lead to a reduction in health inequalities. [ABSTRACT FROM AUTHOR]