Because so many Americans receive health insurance through their employers, the Employee Retirement Income Security Act (ERISA) of 1974 plays a dominant role in the delivery of health care in the United States. The ERISA system enables employers and insurers to save money by providing inadequate health care to employees, thereby creating incentives for these agents to act contrary to the interests of their principals. Such agency costs play a significant role in the current health care crisis and require attention when considering reform. We evaluate the two major health care reform movements by exploring the extent to which each reduces agency costs. We find that agency cost analysis clarifies the benefits, limits, and uncertainties of each approach.