Happy New Year We Begin Again
Mark Cuban Gets Closer... But Misses a Key Function
Mark Cuban Gets Closer (Not Quite)
Mark Cuban, CEO of CostPlusRx, is attempting to repeatedly state “break up the large insurance companies” as if he can simply port his creation of CostPlusRx, to the healthcare delivery system, as a whole. That is impractical and untrue, even if his charm makes you think this is possible. It’s the billionaire version of “looks and sounds right, it’s wrong.”
I asked ChatGPT to explain it to you, which subscribers can read, in full.1 First, there is no question: Cuban deserves credit for creating what I have pleaded for on multiple occasions: reduce the power of the Pharmacy Benefit Manager. Prescription distribution is tough as it is, made much worse by the middleman, the PBM. Remember that the number of Part D plans has declined by almost 70% in the past 5 years, you don’t need to anything more than that. If you believe that carriers are full of greed, and that they print money easily, there should be 2x or 3x the number of options. Instead, it has gone the other way, dramatically so.
The damaging thing is that Cuban has taken the singular instance, prescription drugs, and wants to go OUTSIDE the carrier, and STILL HAVE THE COST count towards the deductible and out-of-pocket maximum that exists INSIDE the insurance contract. That cannot work. It sounds great, it’s wrong practically, and it’s wrong in theory.
Again, vertical integration of healthcare delivery has been codified in the court system. I asked Grok to summarize this for you https://x.com/i/grok/share/pNjciRKRgxyLRTthOuRvgdwgX). Don’t let anyone tell you it was Obama’s or the GOP’s fault: this is an equal-opportunity zone, it crossed administrations, it crossed political party majorities in Congress. It’s the lazy version of “it’s the [insert political opponent identity]’s fault.” That person is intentionally misleading you, or is underinformed, you can choose which one fits, both rationales fail here.
Cuban’s underlying oversight is that it fails to take into account that the existing deductible and the out-of-pocket maximum takes into account the cost the same person (you) would use on prescriptions. If you cherry-picked the CostPlusRx payment where the funds do not go to the carrier, then the carrier would increase the deductible and out-of-pocket maximum accordingly, in order to adjust: the math must math. The flaws in Cuban’s arguments get worse.
More alarming is the fact this displays Mark Cuban’s absence of understanding of the risk of ruin, or he is intentionally ignoring it. That is, insurance carriers ultimately, most importantly, retain the risk of ruin, so that the buyer (you) do not go bankrupt. The carrier eats this risk, it takes money to do this. As I have stated on many other occasions: you are NOT the seller of a lotto ticket, unless you literally need the proceeds for food. The only parties that can sell lotto tickets need a HUGE amount of capital.
This is NOT the only time that Mark Cuban has made this error: he stated that people should simply enroll in original Medicare and avoid Medicare Advantage; that ignores the fact that Part A and Part B alone have no out of pocket maximum, you are the seller of the lotto ticket.
Now you understand how hurricane and earthquake insurance work. Mark Cuban doesn’t. The point here is that there is no systematic lotto ticket seller for health insurance.
So while Mark Cuban deserves a lot of credit for CostPlusRx, the credit ends there.
Miles to Go Before I Sleep
AI interprets the draft of my new book, the image shows you the approach.
Subscribers can ask the draft text questions, using artificial intelligence. We will have a lot more in the coming days. The midnight oil is officially re-lit.
Most of my days is now thinking about how, and how fast with clarity, that I can get information to you, so that you can ask me questions. That is entirely possible, since I can populate the information that I know to be accurate (that is a huge problem when it comes to financial information on the internet).
