Mark Cuban Says Public Companies Found They Were ‘Ripped Off’ On Healthcare But Won’t Say So On Earnings Calls

Cuban said the system supporting big insurers would collapse if employers covering roughly 160 million Americans ran their contracts through AI before signing.

• Mark Cuban said a couple of public companies that used AI to check their health plans discovered big insurers such as UnitedHealth, CVS and Cigna were significantly overcharging them.
• He cited a Dallas PBM contract of more than 1,300 pages to show that insurance and PBM contracts were too long for people to read.
• Cuban said UnitedHealth has more than 3,000 subsidiaries, which transfer about $150 billion a year to each other.

Billionaire investor Mark Cuban said public companies that audited their health plans found they were being overcharged by insurers such as UnitedHealth Group (UNH), CVS Health (CVS) and Cigna (CI), but refused to tell shareholders about the findings.

On a16z’s podcast on Thursday, Cost Plus Drugs co-founder Cuban said he had asked companies to run their insurance and pharmacy benefit contracts through artificial intelligence before signing them, asking where they were being overcharged and what to do about it.

Cuban said a couple of the public companies that took his advice were stunned by the results. “There’s a couple public companies that I told to do this and came back to me and were like, ‘Oh my God, we had no idea how badly we were ripped off.’ I'm begging them to mention it on their quarterly earnings conference calls, and they won't do it because they still have to do business with those [insurers]," he said.

Cuban did not name any companies. He supports the Break Up Big Medicine Act, which would require insurers to divest pharmacy benefit managers and provider assets.

Contracts Too Long To Read

The problem starts with contracts so long that no one can catch every clause, Cuban said. He cited the city of Dallas, which has a PBM contract that tops 1,300 pages.

"There's no group of humans with enough coffee on the planet to be able to catch everything they try to squeeze by," he said.

He said that an insurer wins when a company signs terms it doesn't fully understand. No AI can protect it after that. Cuban said that he uses several AI agents to get contracts from school districts, cities and unions by asking for public records. He said the contracts show how these organizations are being overcharged.

The Case Against Big Insurers

Cuban said that UnitedHealth has more than 3,000 subsidiaries and that these subsidiaries transfer about $150 billion a year with each other. CVS and Cigna are close behind. He said insurance companies raise premiums and deductibles and send patients to businesses they own.

About 60% of people who have health insurance through their jobs get it through self-insured employers, Cuban said. He said that employers often can't figure out what they pay for and what hospitals actually get because the insurers own the administrators that process their claims. He also said insurers' earnings calls never mention lower costs for employers or patients.

"They always say this is going to improve our earnings," Cuban said.

UNH stock closed 0.9% lower on Friday. On Stocktwits, retail sentiment around UNH remained in the ‘bearish’ zone, amid ‘low’ chatter levels over the past day. UnitedHealth had its best year since 2021 in October, outpacing healthcare ETFs. 

No Legislation Needed

Cuban said employers don't need to wait for new laws to cut costs. He said that companies should hire an executive whose only job is to handle healthcare contracts.

Cuban said that the system that helps big insurers and PBMs would fall apart if employers covering about 160 million Americans ran their contracts through AI before signing. "The cost of healthcare in this country would drop like a rock," he said.

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