Mark Cuban calls health care prices ‘horrendous’ – says hospitals and doctors are ‘subprime lenders’ – but he proposes a way to fix things
Mark Cuban doesn’t hold back when it comes to his thoughts on the American healthcare system. On Bluesky on December 10, he explained exactly why he thinks the system is broken and how he is taking steps to fix it.
His biggest complaint? Hospitals and physicians are forced into the role of “Sub Prime Lenders” because they bear 100% of the credit risk for unpaid deductibles, co-pays and coinsurance. “That’s insane,” he wrote, adding, “If they can’t collect payment, they raise prices to make up for that loss.” According to him, this leads to ‘horrific’ prices for health care.
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The ripple effects don’t stop there. According to Cuban, hospitals must function as mortgage loan servicers, navigating a maze of administrative costs to collect unpaid amounts. This cycle leaves many patients in medical debt, often leading to bankruptcy. In Cuban’s eyes, this is not only inefficient; it is a humanitarian disaster.
Insurance companies are also not given a free pass for his criticism. Cuban said insurers do not offer traditional insurance for more than 50 million Americans covered by such plans. Instead, they function as “health care authorities and payment processors,” determining the approval and cost of care, with a primary focus on preventing fraud and assessing medical necessity.
Data from Statista shows that in 2023, approximately 65% of U.S. workers were enrolled in self-funded health insurance, with employers taking direct financial responsibility for employees’ medical claims.
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Cuban believes that this role should not belong to insurers at all. “We should not ask for that authorization process from ins composers,” he argued. Instead, he believes that independent third-party administrators (TPAs) with no financial incentives to approve or deny care should handle this process. “The first step,” he said, “is for self-insured entities to use third-party TPAs and move away from insurance companies for this service.”
As an entrepreneur, Cuban isn’t just theorizing; he puts his money where his mouth is. He implements direct contracts with suppliers for his own employees.
“We determine that there will be no pre-authorizations. We will trust the provider,” he explained. His company will immediately cover the full cost of in-network care, with no out-of-pocket costs for employees.
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The catch? Providers must charge significantly less than they normally would, even less than their published cash prices. Cuban believes this model will save money and time while making employees happier.
It’s a bold move, but it’s in line with his philosophy behind Cost Plus Drugs, the company he founded to disrupt the pharmaceutical industry. Cost Plus Drugs eliminates the middlemen and offers medications at significantly lower prices. As Cuban put it, his employee health care plan is “basically…single payer, paid for by me.”
In addition, Cuban plans to publish his company’s direct contracts, ensuring transparency in pricing. His ultimate vision? A healthcare system in which companies contract directly with healthcare providers, cutting out unnecessary middlemen and reducing costs for everyone involved.
“There are a lot of things in this thread that you can agree or disagree with,” Cuban said, encouraging discussion. But one thing is clear: he is not waiting for the system to repair itself.
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This article Mark Cuban calls healthcare prices ‘horrendous’ – says hospitals and doctors are ‘sub-prime lenders’ forced to raise prices to cover losses. Originally appeared on Benzinga.com
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