The future of employer-based health insurance is uncertain, but the system that insures nearly 160 million Americans appears to have reached a tipping point because of unsustainable cost increases. Evidence is mounting that the employer-based model is running out of steam in its current form. Small employers are dropping coverage, 22 million of the total 47 million uninsured population are full-time workers, and the number of underinsured has risen to 25 million from 16 million in 2003. Facing escalating long-term pension liabilities throughout the 1970s, large employers were quick to trade pension contribution expenses for the cost of 401(k) plan administration and associated expenses if they elected to match employee contributions. The emerging consumer models based on HSAs, has the potential to remove employers from their role as intermediaries for healthcare purchasing. Vertically integrated health systems that provide coordinated hospital and physician services in all care settings will have a distinct advantage in the emerging playing field.