Part 1/6:

The Rise of the Consumer as Healthcare Payer

The Evolution of Employer-Sponsored Insurance

The current employer-sponsored healthcare system in the United States has its roots in the early 1900s. Before the widespread adoption of insurance, consumers would simply pay out-of-pocket for medical services. As healthcare technology advanced, these out-of-pocket costs became prohibitively expensive for the average worker.

In the 1920s, Blue Cross pioneered the concept of selling health insurance plans directly to employers. This allowed them to create a larger risk pool by covering healthy and sick individuals together. During World War II, when Congress instituted a wage freeze, employers began offering health insurance as a way to attract and retain talent. Congress then made employer-sponsored health benefits tax-exempt, cementing this model as the dominant form of healthcare coverage in the U.S.

The Limitations of the Employer-Sponsored Model

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