Driven by fiscal pressures in the 1990s, Canada's provincial Medicare systems cut inpatient care, expanded community services, and consolidated hospitals under regional authorities in nine of ten provinces. Public confidence has been badly shaken by the transition. No province has successfully integrated services across the continuum of care. Home care and prescription drug coverage vary from province to province. Efforts to reform physician payment have stalled, and capacity to measure and manage the quality of care is generally underdeveloped. Thus, for the next few years, policymakers must stabilize the acute care sector, while cautiously pursuing an agenda of piece-meal reforms.