This paper describes the universal health insurance program in Canada and identifies the historical events and social values leading to its adoption. Universal hospital insurance was adopted in 1958, ten years before medical insurance, as a result hospital-based patterns of practice were solidified. Through cost sharing, the federal government influenced the provinces to enact relatively uniform universal plans. From 1951 to 1971 health care expenditures rose rapidly to 7.3% of the gross national product (GNP), but have since decreased and stabilized at about 6.9%. In contrast, health care in the United States represents 8.6% of GNP. Hospital use also increased rapidly in Canada to 1970 but appears to have stabilized and decreased slightly in this decade. Physician incomes rose rapidly before 1971, but since then the increases have slowed and relative incomes of physicians have fallen. Althouth the percent of GNP spent for health care has leveled, there are still substantial annual increases in expenditures that are paid for by government. Two federal initiatives, Bill C-37 and the Lalonde Report, have their roots in cost containment; Bill C-37 transfers greater taxing authority from the federal government to the provinces. To meet the goal of containing costs, provincial governments are moving in the direction of regionalization, decentralization, and greater coordination. In the short term, the provinces have limited hospital budgetary increases to percentages less than the rate of inflation. Cost constraints may be long overdue. Imposing fiscal limits encourages rational planning. It does not appear that the health of Canadians will be adversely affected or essential benefits curtailed by present budgetary restrictions or reorganization.