Under considerable domestic political pressure, the Taiwan government inaugurated a compulsory universal health insurance scheme on 1 March 1995. This new scheme is financed mainly by payroll tax and provides comprehensive health care benefits with a moderate cost sharing. In order to gain efficiency in delivering health services, the scheme enters contracts with health care providers and has been developing a prospective payment system. Meanwhile, the scheme uses a uniform fee schedule and makes all payments through a public single-payer system to control health care costs. By the end of the inaugural year, the scheme covered 92% of the population and the utilization pattern of the newly insured became close to that of the previously insured. However, there is the beginning of a financial crisis because the payments of the scheme are rapidly increasing and expect to exceed the premiums in the coming year. Besides, the scheme did not bring in the efficient use of health care resources and probably caused it to worsen. Taiwan's health care reform has an unfinished agenda.