This study explores the policy options a provincial government might consider in extending health care coverage to the purchase of prescription drugs and dental care. It examines the major public policy objectives involved, such as spreading risk, redistributing wealth, and reducing the barriers to care, and evaluates alternative programs in terms of their costs and efficiency as well as their realization of the basic social objectives of health care. Using varied statistics, some drawn from schemes in other provinces, it estimates what different packages of pharmacare and denticare would have cost in Ontario in 1975. The results indicate that universal coverage may be one of the most costly and least effective options. Based on current modes of service delivery, a universal pharmacare and denticare program would transfer wealth to upper income groups without significantly improving the utilization of health care services. A study of drug manufacturing and retailing systems in Canada and of the structure of dental services suggests that wasteful methods of service delivery could lower per capita costs by 30 to 40 per cent. Potential annual savings in pharmacy and dentistry together in Ontario run into the hundreds of millions of dollars. The authors show how a combination of competitive pressures and selective public intervention can be used to rationalize the delivery system. They caution, however, that such potential savings will be forever unrealized if a public-insurance type of program is introduced which freezes the existing system in place and forecloses the options of either public provision or private market competition.