The deterioration of health services provision in Tanzania from 1980s to 1990s made decentralization of health service provision through the Health Sector Reform (HSR) a necessity. HSR aimed at bringing better utilization of scarce resources, improved quality of health services, increasing user access and cutting rising costs. It is through HSR that health insurance schemes were introduced. Community Health Fund (CHF) came as a result of such efforts. The efficiency and effectiveness of CHF rests on district councils which are responsible for ensuring better performance of CHF. Although the Government of Tanzania targeted 85% of the population to be members of CHF, enrollment has remained as low as 9.2% by 2014. The most sticking problem is the variation in enrollment in different districts. There are districts with higher performance in CHF enrollment like Iramba (54%) and Bariadi (40.9%). Whereas, there are districts with very low enrollments in CHF like Liwale (8%), and Rungwe (6.5%). This paper is an effort to shed some light on this phenomenon ofperformance variation of CHF enrolment in districts. It argues that poor performing districts are constrained by their own weaknesses such as poor management and leadership capacities of Council Health Management Team (CHMT) and lack of motivation among health facility staff and allied health workers. Also, poor sensitization and mobilization of people to join CHF, as well as poor quality healthcare to people has deterred performance of CHF in some districts. The papers’ conclusion apart from offering recommendation also adds to the broader ongoing debate of decentralization process mainly through health insurance.