We Can Build Our Own Insurance Company
The idea sounds radical. It isn't. Several cities and employers have already done it — and saved millions.
The Problem
30%
of every healthcare dollar goes to administrative overhead
$1,200
average annual profit extracted per insured person
~5%
actual medical loss ratio difference driving billions in profit
How Self-Insurance Works
Form a Trust or Co-op
A group of employers, unions, or communities creates a legal entity that pools risk. Requires 500-1,000+ members to spread risk adequately.
Hire a Third-Party Administrator (TPA)
Claims processing and network access without insurance overhead. TPAs cost 8-10% vs. 25-30% with insurers. Many existing hospital networks.
Buy Stop-Loss Insurance
Protects against catastrophic individual claims (typically capped at $250K per person). Costs $50-80/member/month instead of $400+ for full insurance.
Negotiate Directly with Providers
Without an insurer middleman, you can negotiate directly. Reference-Based Pricing (Medicare + 120%) often saves 40-60% vs. PPO rates.
Real Examples
City of Milwaukee
Municipal
Self-insured since 1980. Direct primary care contracts. 60% lower admin overhead.
$48M/yr
saved
Walmart
Corporate
1.6M employees self-insured. Centers of Excellence for complex procedures. Quality outcomes measured.
$1.5B/yr
saved
Montana State Government
State
Reference-Based Pricing model. Direct contracts with 85% of providers.
$15M/yr
saved
Start Small, Scale Up
A union of 800 workers, a coalition of small businesses, or a municipal cooperative — all viable starting points.
See More Solutions →