The authors review the impact of Canada's universal health insurance system on the delivery of psychiatric services. They believe that, on balance, Canadian psychiatrists and their patients have benefited from the system. However, certain categories of patients still do not have access to private care, and public facilities in some provinces have long waiting lists for services because of manpower shortages. A substantial number of psychiatrists have opted out of the system because of dissatisfaction with the intrusion of third-party payment on practice. The Canadian system presently discourages copayment by patients, and thus has reinforced the public's belief in free medical care as a right. The authors discuss the benefits to some patients of direct payment for services and emphasize the need for direct payment to remain an option under national health insurance.