Ever since World War II, the cornerstone of U.S. health care finance has been employer-based insurance. Today such insurance still covers approximately 55 percent of the population, but with declining coverage and loss of community rating, its role as quasi-social insurance has greatly eroded in recent decades. Competitive pressures on U.S. firms have increased as a result of antitrust actions, deregulation of many industries, and the inroads of foreign competition. Many fewer U.S. firms now enjoy steady monopoly profits that they can draw on to subsidize health insurance for their workers.
For example, forty years ago the largest private employer was AT&T, a regulated monopoly with guaranteed profits. If health insurance premiums rose, they could easily be passed on to telephone subscribers. Moreover, AT&T was under no pressure to force older and sicker workers to pay more than their peers to compensate for their higher use of care. Today the largest private employer is Wal-Mart, which despite its size faces intense competition daily from a host of other retail outlets. When they offer health insurance, it must come out of their workers’ wages; for minimum-wage employees, this is not possible, so it often will mean loss of jobs.