How Insurance Companies Are Like Unregulated Banks

Most business owners would not knowingly deposit their cash in an unstable bank where they could never get it back. Yet when it comes to health insurance, that is exactly what happens every single year to far too many businesses.

Here is the uncomfortable truth: insurance companies operate like unregulated banks, but with far less transparency and far more control over your money.

Every month, you hand over massive sums in premiums, just like a customer depositing money in a bank. When you put money in a bank, the money is still yours. True, the bank gets to use the money and invest it, but they usually give you some of their profits as interest and the money remains in your name. But with a health plan run by an insurance company, the money becomes theirs. You lose control the moment it is paid.

Insurers promise to cover claims just like banks promise to let you withdraw cash. But insurance companies add layers of red tape: networks, pre-authorizations, deductibles, exclusions, denials. It is your money, but they decide if, when, and how it gets used. Each year they keep any money left in the claims account.

Just like banks earn interest on your deposits, insurers invest your premiums long before paying out claims. The longer they delay, the more they make. It is why denial management and claim lag are core parts of their business model.

Unlike banks, insurers are not subject to the same federal regulation or financial reserve requirements. ERISA laws even preempt many state protections. Employers are on the hook, but insurers often dodge accountability.

Everyone said that now that the ACA has been law, insurance companies have to use all but 15% of the premium for claims and wellness programs. Here is the twist: most insurers own the pharmacy benefit managers (PBMs), provider networks, and even the facilities they pay. That is like a bank approving loans and paying itself the interest. It is vertical integration dressed up as cost containment.

Smart employers are realizing the solution is not just switching carriers or increasing deductibles. It is regaining control. Strategies like self-funding with transparent partners, working with independent advisors, and using claims data to make informed decisions are like moving your money out of a casino and into a well-run vault.

You would not trust your business to an unregulated bank. So why trust your health plan to one?

In my book Total Benefit Control, I lay out the roadmap to controlling the cost of a benefit plan.

Glen Riensche, CLU, RHU, REBC 402-202-2550 [email protected]