All countries worldwide have signed up to the United Nations Sustainable Development Goals and have committed to the objective of achieving 'universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all'. During the COVID-19 pandemic and beyond, advancement toward universal health coverage (UHC) will become more difficult for many countries, demonstrating that locally led priority setting is urgently needed to provide health services with appropriate financial protection to all. Because resources are limited and no national constituency can provide an unlimited number of services to their whole population in a sustainable manner, rationing and setting priorities for the selection of interventions to be included in a defined package of services is critical. In this Perspective, we discuss how packages of essential health services can be developed in resource-constrained settings, and detail how experts and the public can decide on principles and criteria, use a comprehensive array of analytical methods and choose which services to be provided free of charge. We illustrate these main steps while drawing on a recently conducted exercise of revising the national essential health services package in Ethiopia, which we compare with examples from other countries that have defined their essential benefits packages. This Perspective also provides recommendations for other low- and middle-income countries on their pathway to UHC.