ABSTRACT
The development of formal systems of health care finance in the nineteenth and twentieth centuries centred mainly on employment and the workplace. There are several reasons why this path was followed. First, to an extent it is in the financial interest of employers to have a healthy work force, with low absence for sickness, so that an employer-sponsored health service may be a rational profit-maximising strategy. Second, there are advantages for risk management to have large numbers in a health plan. The large number employed in large firms could be provided with medical insurance efficiently and with low transaction costs. An additional advantage of involving employers in the health system finance is to use their financial and bargaining skills to improve the quality and cost of the services.
