Where Bernie Madoff Went Wrong

Poor Bernie Madoff. He seemed like such a smart guy. He was reaping in gobs of money – until the bottom fell out of his Ponzi scheme.

His ultimate downfall was that he led his investors to believe that they would eventually get their money back with dividends, but when his investment group got too large, he could no longer deliver on this promise. Yada, yada, yada – he’s going to be locked up for a very long time.

I guess poor Bernie wasn’t so smart after all. If he was truly smart, he would have set up a health insurance company instead.

Health Insurance companies take lots of money from you every month – a sizeable chunk of which never goes toward your health care. Instead, they funnel huge amounts of money into what is referred to as a reserve fund. This money is then reinvested, and it grows and grows. These funds usually represent many billions of dollars for each carrier. For many people, even though they don’t know it, their contribution to their health carriers reserve fund can be their largest investment vehicle. Too bad they will never see a dime of that money….




The idea behind these reserve funds is that they can use this money in an emergency to cover ‘unexpected’ payments – like if the United States were to be hit by the black plague. But, to the best of my knowledge, no health insurance carrier ever has tapped their fund for this purpose. So your money sits in their fund, working and growing, month by month, year by year.

So, what happens when you change your health insurance carrier – do you get any of your reserve fund contributions back? Nope. How about if your total contribution in premiums exceeds the benefits paid on your behalf, plus administrative costs – surely you would qualify for some type of payout? Nope.

The fact is that the money you unwittingly and unwillingly paid into your carriers reserve fund is theirs to keep – whether you like it or not. After all, they never promised you or led you to believe that they would ever pay this investment capital back to you.

Smart people, these insurance folks. The never promised you a dime back. Heck, 95% of their policyholders are blissfully unaware that they even paid this money in the first place. So no one is confiscating the personal property of these insurance company executives, or sending them up the river for a very long time. No one is writing newspaper articles about them, and how they ripped of millions of Americans. In fact, they are getting away Scott-free.



Poor Bernie never got involved in this profitable, consequence-free game …and THAT'S where Bernie went wrong.


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