Introduction and Episode Overview
[00:00:00] Stacey Richter: Episode 488. "Mark Cuban, Cora Opsahl, Trust, Simplicity, and a Chicken—Today We Talk Healthcare."
Event Announcement and Keynote Speakers
[00:00:25] Stacey Richter: If you are listening to this prior to October 9th, 2025, go to the 32BJ Changing the Playbook on Hospital Prices event where Mark Cuban will be keynoting. Cora Opsahl will also be speaking and I will be there listening link in the show notes, so trust, simplicity, and a chicken.
Trust, Simplicity, and a Chicken: The Core Message
[00:00:55] Stacey Richter: Yeah, this is where this whole conversation with Mark Cuban and Cora Opsahl winds up. And it is a barnstormer because you know what some really good advice is for anybody trying to do right by patients and taxpayers and plan sponsors, it will take trust. It will take making the complicated as simple as possible.
And also if you could pay with a chicken, like in the good old days, that would be messy. I can say with confidence, having grown up in Pennsylvania, Dutch country where there are many, many chickens, but also being able to pay with a chicken could also indicate that healthcare prices are reasonably chicken proportionate and that the doctor-patient relationship is good enough to break bread. Or have chicken.
That last part is really important, and Cora Opsahl says this at one point in the episode that follows. It doesn't matter how wonderful the transparency or the financing, if the prices are insane and there's no more reasonably priced options in any given market, then yeah.
Healthcare Market Challenges and Solutions
[00:01:47] Stacey Richter: Shane Cerone says in an upcoming show, he says, We do not have a broken healthcare market. We do not have a healthcare market. There is no market.
Okay, so you could call this conversation a continuation of the episode with Ann Kempski, episode 444, entitled "Two State Healthcare Laws Often Don't Go As Planned". But it's not just healthcare laws that often don't go as planned.
It's some very foundational constructs that we have built the healthcare sector upon that may also not go as planned. The healthcare sector is like a game of Pachinko. You chuck an input into the mix and it will bounce all around into all the perverse incentives and human beings and the non-market that we have, and who the heck knows what is gonna pop out the other side. It's like game theory at its most unpredictable.
So in healthcare, there are many, many examples of when the solution to a problem arguably creates worse problems than the problems the solution was trying to solve for.
But we Mark Cuban, Cora, Opsahl and I are gonna shake our fists at two such solutions today.
High Deductible Health Plans: Pros and Cons
[00:02:51] Stacey Richter: High deductible health plans or just high deductibles in general, and then self-insured employers trying to solve the complexity of the healthcare industry by hiring consultants and middlemen, middle people, and other vendors to navigate the Pachinko parlor, that is our $4.9 trillion healthcare sector on their behalf.
Now, I am not in any way saying the spirit of these two endeavors, high deductibles and hiring consultants and middlemen weren't wholehearted. They seem just like many other well-intentioned solutions, very logical on their face.
What I am saying is there are many ways in the real world for even the most, again, genuine endeavor to turn into a money grab for those so inclined.
The Role of Consultants and Middlemen
[00:03:38] Stacey Richter: While at the same time I'm saying all this, I'm also very much saying that there are some amazing consultants and middle folks such as independent third party administrators, otherwise known as TPAs, and PBMs, pharmacy benefit managers who are transparent and hold themselves accountable to the fiduciary responsibilities that their clients are held to in real terms.
Not just in marketing speak with 40 pages of disclaimers following. There are great folks out there, many of whom listen to this podcast and are part of our tribe on the regular. And to you I say thank you for being here.
Because it takes all the knowledge and more from every one of the guests featured in these past 487 Relentless Health Value episodes plus treating every day like a school day to make sure that we all are not getting shanked from behind by some innocent looking contract term that turns out to be anything, but.
The conversation that follows starts out talking about high deductibles, naturally segues into how third party intermediaries can actually exacerbate the issues here.
Transparency and Financing in Healthcare
[00:04:31] Stacey Richter: Then we get into transparency, financing, clinical organizations, taking on risk, and the benefits and challenges of direct contracts. Then Mark lays out a vision for the future.
Okay. I wanna get to this conversation. If you are a new listener here, and you might be because yeah, Mark Cuban, let me just inform you that this podcast is largely listened to by those who work in the healthcare industry. So you are going to encounter acronyms.
You will also encounter me referencing earlier episodes because surveys say listeners really appreciate these callbacks to go get additional information about any given topic. You can get what amounts to a personalized Masters of Healthcare Administration curriculum. If you follow the episode threads long enough. And that was a direct quote from a listener.
About the acronyms, they are holy terrors and we in the healthcare industry are chock-full of them. In the show notes, I will put a list of acronyms that come up so that you can follow along at home if this is your first day at our rodeo.
Also in the show notes is a transcript of this show, along with links to all of the mentioned episodes.
Introduction to the Conversation with Mark Cuban and Cora Opsahl
[00:05:36] Stacey Richter: Okay, here's my conversation with Mark Cuban, who is, Mark Cuban and also CEO and founder of Mark Cuban Cost Plus Drugs. Also, we have Cora Opsahl, who is Health Fund director of the 32BJ Health Fund, and an expert in many things healthcare.
My name is Stacey Richter. This podcast is sponsored by Aventria Health Group.
Mark Cuban and Cora Opsahl Introductions
[00:05:57] Stacey Richter: Today we are going to talk about solutions where the proposed fix winds up maybe, or maybe not being as bad or maybe worse as the original problem the solution was supposed to fix. So today here to discuss this topic, we have Mark Cuban.
[00:06:14] Mark Cuban: What's up guys?
[00:06:15] Stacey Richter: And Cora Opsahl.
[00:06:16] Cora Opsahl: Hey everybody.
[00:06:17] Stacey Richter: Welcome to Relentless Health Value.
High Deductible Health Plans: Real-World Impacts
[00:06:19] Stacey Richter: So let's start with solution one. High deductible health plans, just high deductibles in general. You know, let's just talk about the why high deductibles got set up in the first place, which was this idea that if patients had a little skin in the game, that healthcare costs would come down. That was the original rationale behind the raising of deductibles in these so-called consumer high deductible health plans, CHDHPs, you know, make people spend their own money first and then they'll be smart shoppers.
How's that working out?
[00:06:48] Mark Cuban: Yeah, high is high. I don't know whether to take high in the cost sense or high in the smoke 'em while you got 'em sense. Because if you can't afford your deductible, your insurance is worthless. You know, if we're talking copays of 5, 10, 15, 20, $25, okay? A discussion can be had.
But if you've got a $4000, $5000 deductible, and your max out of pocket is $19,200 for your family, you're screwed. You know, you really don't have any healthcare protection at all.
[00:07:25] Stacey Richter: Yeah. We often talk about patients being functionally uninsured because if your deductible is more than you have in your bank account, then you can't afford to use your own insurance. How do you see that working out on the ground Cora.
[00:07:38] Cora Opsahl: High Deductibles had a really solid reason behind it, right? The idea was, people need to be able to have an understanding of why they're using their insurance. But functionally, I agree. We're creating a class of uninsured folks.
On top of that I would argue it's unethical because all you're gonna do is cause people to delay care. Delayed care just means more expensive care down the road. It also then is gonna compound the issue of uncompensated care that's going to the emergency rooms. You're not seeing people at primary care docs, you're sending people to emergency rooms.
And so what is meant, I think, in an attempt to put quote unquote skin in the game is causing employers to actually just increase their costs across the board.
[00:08:21] Mark Cuban: And I don't even look at a skin in the game anymore. I think it's really just a payroll deduction from the employee and a cash addition to the insurance company.
You know, the insurance companies aren't dumb. They know that the higher the deductible, the less likely it is to be used, which means they get to keep that money in their bank account.
And if this was a real world applications where people really cared about patients, then there would be a credit check.
Now that sounds counterintuitive, right? To check people's credit before they can get access to their insurance. But if, you know, 40% of Americans only have $400 or less in the bank, having a 1500 deductible, which seems reasonable in this day and age, is still as good as having a $10 million deductible because you can't afford it one way or the other.
And then you get into the ACA subsidies where the cash just goes right to the big insurance companies, that are offering the plans that the Feds approved. It doesn't make any sense. This whole system is designed for the big insurance companies,
[00:09:29] Stacey Richter: Episode 482, with Preston Alexander called "Three Surprising Ways Carriers Make Lots of Money", and it's all about the float.
[00:09:36] Cora Opsahl: I think Mark is absolutely right. On top of that, we know that. I think it's over 25% of folks, if not more, and Stacey, you'll probably override with the correct number. Go without care because they can't afford it.
Taking a side, we're talking about copays, outside of even talking about high deductibles. I know that my plan is very generous and I love the fact that I get to provide benefits that are really affordable. And I've still had folks call me and say, I can't get my brand diabetes drug because it's $40 or a $30 copay. Now, if health insurance is there in order to protect the healthcare of members and your employees and the population, we're not doing that if we're not making it affordable for folks.
[00:10:19] Mark Cuban: Well, we've got this disconnect. We're using health insurance as a proxy for healthcare.
[00:10:24] Cora Opsahl: Absolutely.
[00:10:25] Mark Cuban: There's not a connection between the two at all. I mean, you guys have heard me say this before, healthcare is a really easy business on the business side. Doctors and hospitals do what they do, the miracles they offer, but on the business side, it's how much does it cost? How do you pay for it? And who takes the risk for people who can't pay?
Those are the only three questions that need to be answered on the business side. Yet we don't try to answer those questions. We just presume that the health insurance industry is gonna take care of everything.
[00:10:56] Stacey Richter: Mark, I wanna just do call-back back to something that you said the other day, which is that the higher the deductibles, the more the providers themselves, in a way become subprime lenders.
Which basically also means, it's a funny, if you start thinking about it paradoxically, the carriers who are often perceived as the ones taking risks, and in the case of self-insured employers, it's the providers who may arguably be taking more risk than the carriers..
[00:11:21] Mark Cuban: You're exactly right. Think about what happens. A member gets sick and needs to go to the doctor, and they have just a thousand dollars, just, a thousand dollars deductible, right? The doctor refers them. They went through their primary care doctor, which is included in their plan, let's say, and they're recommended to a hospital and they know that it's going to cost them money.
You go to the hospital with your appointment. First thing they want to do is ask you for a credit card or money to pay for your deductible. Now the hospitals in a quagmire right there, right? They have a paradox right there. Because if they don't provide you funding for your deductible, then they can't get the money that would come from the insurance company post deductible.
And so, not only are they using third parties to fund uninsured people, but they're using them to fund deductibles now as well.
What's the whole point? Why do we need insurance companies at this point at all, if they're not truly taking the risk?
[00:12:25] Cora Opsahl: I mean, and I would also mention, I think, Mark, you're spot on, but even beyond that, when you think about it, you've got the provider who now is going to be actually in the debt collection business. Right? They're not in the healthcare business.
If you think about it, it's part of the reason that the solutions that are out there, such as direct contracting, where you get to remove these cost share, you know, components and remove this. I mean, I think, Stacey, you were just talking about the average is one, one administrator for every two providers.
[00:12:55] Stacey Richter: Listen to episode 486 with Dr. Stan Schwartz, where we get into hotboxing patients for copayments and also just how many administrators that takes on the clinical organization side to manage what amounts to a debt collection business.
[00:13:12] Cora Opsahl: If we can shift that where you've got the one administrator for 10 providers, you're then actually providing healthcare. And you know, it stops people from being afraid to go to the doctor.
[00:13:22] Stacey Richter: Debt collection, I think is also a really interesting thing to start thinking about because if you are a large, consolidated health system, huge endowment, lots of people, rev cycle management, the whole works, you may be well equipped to essentially be a bank, if you will.
[00:13:36] Mark Cuban: Even then, when you talk to their CFOs, they're saying they have, you know, a 50% rate of debt of people not being able to pay, and so they're losing 50% of that, which creates a not so virtuous cycle, right? So they're increasing their interest rate, all playing all these games to compensate for that, even if they're big. And if you're small or if you're urban or if you're rural, I think to your point, you're stuck.
[00:14:01] Stacey Richter: I will also just point out at the JPM conference, there was a big consolidated health system touting the credit cards that they're offering to the patients.
[00:14:07] Mark Cuban: They should, that's not a bad thing.
[00:14:09] Stacey Richter: They'll making more money off those credit cards than,
[00:14:11] Mark Cuban: I'm okay with that if it, you know, if the rates aren't usurious right or just awful, then I'd be like, okay, they're gonna gimme credit. And so I'll go to the doctor and as long as it's something reasonable, I'll just plan to go to the doctor and make an appointment there. That works.
[00:14:29] Cora Opsahl: I mean, true. I agree, Mark, it does work. But I think what you're talking about is the reasonability, it related to the credit card.
But let's talk about the reasonability of prices. I mean, you gotta talk about both hand in hand because right now prices are unreasonable.
[00:14:41] Mark Cuban: If you know what they are.
[00:14:42] Cora Opsahl: If you know what they are at all. You know, I think we can talk about how transparency is potentially a solution, but again, it's only if you understand how it's actually gonna be billed.
If you really understand what you're supposed to be looking for. I think we could call out words like DRG and CPT, but I'll tell you, when I talk to my mother, she has no idea what I'm talking about.
[00:15:01] Mark Cuban: And those are only relevant to insurance, right? If there were no insurance companies. Would we have DRG codes?
[00:15:07] Cora Opsahl: No. It'd probably just say, you know, inpatient stay for three days or whatever it would be. It's something that makes sense to the normal person.
You know, but I think we have a, we have a fundamental reasonability problem. If you look at the, all of the studies right now that are coming out about what they expect premium increases to be our, you know, nine, 10%, I think the funny thing I always find interesting is, the insurance companies are saying their premiums are gonna go up 9%. The insurance companies are the ones who are negotiating the prices that are also going up 9%.
I think what we should be replacing the word premium with price.
[00:15:42] Stacey Richter: Dr. Stan Schwartz was on the pod a couple of weeks ago and one of the things that he said, which I think is very apropos here, he said, "So much of what we call expense in medicine is simply pricing failure.”
[00:15:52] Mark Cuban: Yeah, I mean, and it, you know, it's the all time question. Why is it any schmo with the credit card can walk into a hospital and pay the cash rate, which can be less than half of the rate negotiated by the biggest, most powerful insurance companies.
[00:16:07] Stacey Richter: Listen to episode 425 with Marshall Allen, or there's a bunch of shows about this topic, but just how common it is for it to actually be cheaper for a patient to pay cash, then to pay the insurance negotiated price, right? Going in with no insurance is cheaper than going in with insurance.
[00:16:29] Mark Cuban: Plus, you know, it's the whole cycle management of billing because the amount negotiated is not what the insurance company's going to pay anyways.
You know, they'll say that hip replacement's, negotiated rate is 15,000. Somebody gets their hip replaced, the bill goes to the insurance company, and they pay 12,000. Then they go to the hospital and they say, that's what we're paying. If you don't like it, sue us. You know, or do whatever. And so the hospital now has, who knows how many administrators or lawyers who just negotiate and sue.
And when you talk to a CFO about that, they say three to 5% of their revenue is lost because the insurance companies just underpay.
And when they underpay, and when denials come and denials, half the reason of denials aren't to deny but to delay. So they get the time value of the money from the premiums, right?
And so you have denials, you have the underpayment. So what do hospitals do in response? They come up and they invent new ways to generate revenue. They increase prices, they do facilities fees. You know, they do play all these games. They acquire independent practices that were in the same building as them, but now it's inpatient because it's the same building as the hospital and they own them.
All the private equity games that are played that way. There's all this financial engineering when we just need to simplify it.
Direct Contracting and Employer Strategies
[00:17:50] Mark Cuban: And that's to your point, earlier Cora. That's why we're doing a lot with direct contracting and I'm as much as I can, I'm pushing companies, direct contract, direct contract, direct contract, and providers as well.
I mean, just think about it, if we just got rid of, if, if the American Hospital Association just created their own network and just said, Hey, we want all of our hospitals to join this network and offer their cash prices to anybody willing to pay cash, you know, including employers. The whole system could change.
[00:18:20] Cora Opsahl: But I think this is one of the things is that it's easy, I think, to think about it in a fully insured market, kind of what you're talking about, Mark. But when we pivot to self-funded employers, right, I think it shifts a little bit because the self-funded employer is ultimately paying the bill,
[00:18:33] Mark Cuban: And taking all the risk, and taking all and risk.
[00:18:35] Cora Opsahl: And taking all of the risk. And I do believe there are self-funded employers, you know, 32BJ Health Fund, being one who want to direct contract. But that also means though, that you gotta find the hospital and the provider who wants to. And has the capacity to, because they're gonna say, drive all of my volume here.
But if you already cost more, I always think about it. I don't wanna pay for an outfit if all I need is the T-shirt. Right?
[00:18:56] Mark Cuban: I think about that all the time.
[00:18:57] Cora Opsahl: Right?
And right, or, or, or even a better analogy is why if I can get a white t-shirt from Target, just as good as the white t-shirt that I'm getting from Macy's or the white T-shirt I'm gonna get from Nordstrom, sending all of my people to Nordstrom, who's getting me the Macy's price, when I could probably send people to, you know, when I don't have to get, engage and get the Target price. The problem we have is also, again, I don't know if that's the good deal.
[00:19:23] Mark Cuban: Yeah. No transparency. Yeah. There's no transparency.
[00:19:27] Stacey Richter: Episode 436 with Elizabeth Mitchell, or episode 480 with Kimberly Carleson or the earlier show with Cora Opsahl. Listen to those on just how difficult it is to just go out and buy healthcare services. You can't get the data to assess the quality. You can't figure out the prices. You can't figure out what's been bundled together or sold separately.
[00:19:47] Cora Opsahl: Yeah. Even if you have your data, you were saying, you know, there's the underpayments to providers. I don't know if that's happening. I get my claims data. I only know what I'm being billed. I don't know what is then being paid to the provider.
[00:20:00] Stacey Richter: So we started out talking about high deductible health plans. Well, we pivoted a little bit, but I'm hanging on for this ride.
So we started out talking about what the problems are with high deductible health plans. The high deductible health plans were created to solve one problem, which is, you know, obviously patients cannot be moral hazard.
The whole nine you give free healthcare to people. People are gonna take advantage of it in ways. We need them to shop. We need them to be judicious with these dollars. So let's give them some skin in the game here.
And what has wound up happening is that we have created a very obvious, this would be really hard for anyone to argue against these days, that the idea may have been a decent idea at the beginning, but it has pivoted to, lets cost shift to employees.
And insurance companies or carriers, let's just say, because many times they, if they're dealing with a self-insured employer, they're not insurance companies any longer. They are administrating the risk for the employer taking none themselves.
But in those situations then you have the carrier who's like, “Wait, I can take advantage of this.” Because as Mark said, you've got the float, you've got all kinds of things that can be happening there from the carrier standpoint.
Meanwhile, the self-insured employer also, if you have and this was alluded to by Mark as well, if you have a CEO who's like, well, $5,000, like whatever. I can find that in my couch cushions. Then they are buying a plan for themselves, not necessarily their $18 an hour …
[00:21:27] Mark Cuban: Yeah. Its a core competency to understand their benefits at all. And even though it's the second largest line item, expense line item after payroll, as Cora knows very well, it's hard to dig in.
I was just as much of an idiot with the Mavericks and my other companies. I had no idea I was getting ripped off. But for our employees and their families now, you know, as Cora knows, we're doing all direct contracting. All direct contracting.
And slowly but surely, we're adding more and more providers. We're up to like 8,800 providers in our network right now. And so we're getting there.
But what we tell them and the reason they're willing to give us their cash price or something close to it. Sometimes we work off of Medicare as a reference. We tell them, A, we're gonna pay you cash up front. B, there is no employee deductible.
You know it is compensation for our employees one way or the other, and their families, right? And you can pay it up front, pay it via healthcare, whatever it may be. And so you're not taking that collection risk. You're getting paid the full amount, and we'll do all of the pre-auth in advance. By the time it gets to you, it's already being been approved, and you take no pre-authorization denial or pre-authorization or denial risk.
And they're like, no credit risk, no underpay risk, no pre-auth risk. Where do I sign up?
Now the catch is and why some have been hesitant, I should add, is we're also gonna publish those contracts. And so, we're gonna create something called Cost Plus Wellness, and hopefully, knock on wood, this, or next month or soon, we're gonna start publishing those contracts so every employer can see them.
So to Cora's point in terms of transparency, we'll see what the hospitals and doctors and dentists and etc are charging with the MRIs are costing, what the CAT scans are, whatever it may be. And you can compare.
And we're trying to extend it further. We're not quite there yet, so that employees and members can shop and because we want them to go and find the best doctor at the best price, that's part of our network.
We want them to be able to be the most confident, but shopping in terms of quality within our network as opposed to “Okay, I'm gonna save my 25... this one's a $25 copay, and that one's a 50.”
[00:23:43] Stacey Richter: With no relationship to quality. Go ahead, Cora.
[00:23:45] Cora Opsahl: I mean, I was gonna say, Mark, I think what you though we are hitting on is it is taking, I mean, and I've said this many a times. We are asking people to understand healthcare who are not healthcare experts.
[00:23:57] Mark Cuban: Nobody's a healthcare expert because it all changes every day.
[00:24:00] Cora Opsahl: Every day. But I think it also though hits on the fact that the current system where self-insured employers go to a carrier, they go through an RFP, that's a black box that they offload their brain to a consultant or a broker. They go and hire a PBM or a carrier to go then get the network.
We need to start taking accountability for some of this, because you're right. I will say, look, 32BJ Health Fund removed a hospital system in a way that has really never been done, and still...
[00:24:31] Mark Cuban: You guys deserve a ton of credit for that.
[00:24:33] Cora Opsahl: And today, not a single employer probably could do it themselves because they won't be allowed in their contracts.
[00:24:39] Stacey Richter: Listen to episode 452 with Cora, where she gets into what she's talking about here, just how hard it was to kick a hospital out of their network. Because of the contracts that their TPA, third party administrator had made that had nothing to do with 32BJ, but which 32BJ was stuck in the middle of. This hospital, was costing them millions and millions of dollars in excess charges.
Then 32BJ figured out a way to get rid of this hospital from their network. And everybody, meaning everybody in the union got the biggest raise they had ever got, and employers got a premium holiday for a time. This is just how much this hospital was cha-ching, the union. When there were other just as good options right down the road that members could go to that were much more affordable.
[00:25:26] Cora Opsahl: We did it with almost no member noise because of exactly what you said, we gave back to the members. And I think that so often cutting costs in healthcare is about a bottom line and less about the healthcare piece to it. But if you give people a choice and you can say, “Here's access to high quality docs and here's what you're gonna get out of it.”
Because you're right, it's total compensation, whether you're paying for it in your health insurance premium or in your wages. And I don't know about you, I'd rather have my money in my paycheck.
[00:25:55] Mark Cuban: Yeah, of course.
[00:25:56] Cora Opsahl: Than in a health insurance premium.
[00:25:57] Mark Cuban: Even if you have a doctor that you're currently using that's not part of the network, right? You can go to them and try to negotiate with the doctor, or even if they're part of a bigger system because they want to keep you.
Now, some will just say no. If it's a market dominant network, you're outta luck. But if it's a specialist or somebody, they're always looking for patients and they want to keep their patients. And for the most part, we've been able to negotiate.
[00:26:21] Stacey Richter: Circling back to the high deductible health plan, which puts a lot of indie practices in a really bad spot, but also those indie practices are probably some of the most agile and also willing to do some of these things. So the other thing that I just wanna point out as a benefit of what we're talking about here is that it does give some strength to these indie practices who are currently suffering.
[00:26:44] Mark Cuban: But the crazy part is Stacey, like even when we talk to them sometimes, they have like their 1 or 2 billing people that have been doing it the same way for 15 years, and it's hard to get them to adjust.
So you have to go talk to the surgeon, their doctor directly. You can't talk to their administrative people because they're like, I don't want new paperwork. I don't want to try new things. But your bigger point is right on. They are more agile and they also feel the pressure of all the changes in the industry.
[00:27:11] Stacey Richter: And also they feel the pressure of those, look at me, I just keep, keep going back. I keep going back here. Of the high deductibles because they're the ones who don't have a huge endowment and seven consultants who are at the ready to try to figure out how to make the challenge into an opportunity. Indie practices just do not have the wherewithal to be a bank.
[00:27:32] Mark Cuban: When I see hospitals, which is almost all of them with revenue cycle management, consultants or employees, that's proof of failure, you know. That means a system is a mess. And again, it is always, it's who pays, you know, who, what's the price and who takes on the risk for nonpayment?
[00:27:52] Stacey Richter: I just read an article, I think in Modern Healthcare about how the biggest private equity area of investment these days is in RCM revenue cycle management.
[00:28:00] Cora Opsahl: And I would say, who pays and what's the price? And I would actually add a third P, which is, where does the power lie? The idea was we wanted to put power back in the hands of the patient by having choice through the high deductible health plans, and it has now failed.
[00:28:14] Mark Cuban: And patients have no power. None.
[00:28:16] Cora Opsahl: Right. And you know, if we think about kind of other ways in which we can talk through the concept of power that I think has really failed us and this healthcare system, is that the power is not with the employer. The power is not with the patient. The power is oftentimes not with the independent providers. It's with the C-Suites. It's with the large insurance companies. It's with the hospital system.
The Complexity of Healthcare Management
[00:28:39] Mark Cuban: Well, yeah. It's The C-suites don't even know what power they have, and that's where I spend a big part of my day. Whether it's talking about direct contracting for medical or PBMs and you know, pass through PBM transparent PBMs.
CEOs have no idea how the whole thing works. None. And their HR people and their CFOs don't. HR is just trying to survive because they have 15, depending how big the company is, 15, 50, a hundred people who got their, their pre-op denials. And they can't even come to work 'cause their kids are sick. Right? And they have to deal with their kids.
And so that's what HR spends half their day dealing with. Nobody wants to spend the time dealing with, okay, how do I kick my BUCAH out and go to direct contracting?
[00:29:23] Stacey Richter: So let me use this as a segue, because a lot of what we have been talking about in this first topic, is a really big foreshadowing and tee up to the second solution to a problem where the solution might be worse than the problem.
And that one is this, that one of the biggest challenges for self-insured employers is that healthcare and claims. We have just spent the past 10 minutes talking about all the complexities here. It's really complicated and the whole payment system is just ridiculously convoluted.
Outsourcing and Its Pitfalls
[00:29:53] Stacey Richter: What the self-insured employer winds up doing for all the reasons that we just talked about is hiring, is outsourcing, hiring layers of vendors and administrators to manage it all on their behalf.
But then again, you wind up with this layer in the middle. And we have just talked at length about how that solution might be worse of a problem than the original problem, which is, this is really complicated and actually exacerbated the complexity because you throw a whole bunch of consultants in the mix. You throw the sprawling bureaucracies in the mix. You throw people who have spent the past 10 years,
[00:30:30] Mark Cuban: Well, why did all that happen? The only reason that happens is to justify a lower level decision to HR, which then justifies it to the CFO and or the CEO. It's not that all these things are all that difficult.
The Role of Healthcare CFOs and CEOs
[00:30:45] Mark Cuban: I think, you know, what we tell companies is you need a healthcare CFO or CEO, somebody who just like Cora is, right? That you are the CEO of 32BJ's Healthcare.
[00:30:56] Cora Opsahl: Yes.
[00:30:57] Mark Cuban: You know, your whole mission is to optimize for outcomes for patients, your members, and the economic side. Any company with 500 or more employees may be smaller, can afford to pay somebody $150,000 to do just that and get a return of their money almost immediately because they just don't realize just how much money they're leaving on the table and how badly they're getting ripped off.
Challenges in Self-Insured Employers
[00:31:24] Stacey Richter: Yeah. Andreas Mang actually said that flat out on the podcast. He said, “Look, any self-insured employer. Whether they wanna face the truth or not is running a small insurance company.”
Andreas Mang from Blackstone, episode 419, "The Financialization of Health Benefits".
[00:31:43] Mark Cuban: Yes. Yeah, that's what Warren Buffet said. You know, Ford Motor Company was an insurance company disguised as car company.
[00:31:51] Stacey Richter: What were you gonna add, Cora?
[00:31:52] Cora Opsahl: I was just gonna say you need people who are healthcare experts. And I agree with you, mark what you said earlier, no one's a healthcare expert. 'cause every day I read a new article and learn something new about healthcare, and I've been doing this for almost 20 years.
Part of the challenge that exists, and one of the reasons we have, you know, third-party administrators and insurance companies and PBMs, is that we're asking people in HR whose job should be about the wellbeing of the employee to be the healthcare CEO.
And their job, by the way, most of the time is open enrollment. They wanna make sure people sign up for the product. Not, is the product meeting their needs? Not, are we making sure they have the right access? Not what is the risk profile of our population, and should we be caring about diabetes or should we care about weight loss? Or maybe we have a really healthy population.
But what we're seeing is, there's different pockets and maybe you have cancer problem and therefore you should be focusing on screening. Or you have, you're a teacher's organization and so you have a lot of young parents and a lot of babies. That is what the focus should be on, and I agree with you. I have always said, hire a healthcare analyst and if they cannot find savings worth their salaries, it means you have a bad analyst, not a better plan.
[00:33:03] Mark Cuban: Right for sure, because there's plenty there. I mean,
[00:33:05] Cora Opsahl: There's so much there.
Insurance Companies and Their Influence
[00:33:06] Mark Cuban: I mean, insurance companies are just stealing companies, particularly self-insured companies, stealing them blind. I mean, that's why they continue to vertically integrate and buy up every company they can, because that's how you play hide the salami, you know. That's how you hide all the numbers from regulatory agencies.
I saw a stat that, I won't mention the name of the biggest insurance company, but we can guess who it is. Has over 2,500 subsidiaries and $161 billion in annual intercompany transfers. Now that $161 billion is 0.3% of the GDP of the United States of America.
[00:33:50] Stacey Richter: 0.3% of the GDP? Episode 482 called "Three Surprising Ways Carriers Make Lots of Money.” It's about the float, but also these intracompany eliminations. Listen to that show if you didn't understand what I just said.
[00:34:05] Mark Cuban: That's insane when you think about it. But the bigger they get, the easier it is to hide things.
So if you have an MLR of 80 to 85%. But you get your PBM to charge you more, you're good, right? If you're a carrier and you have a rate for a provider and you gross it up some for your self-insured sponsors, so that that balances their book of business for Medicare and Medicaid and kind of works in the interest of the carrier and the provider, then, okay, but what about the employer that's paying too much?
It doesn't matter, but they have, going back to what Cora says, it all comes down to leverage and power. There will be some networks that have more power in certain markets, but more often than not, the insurance companies, the reason they're so powerful is because between the lives that they insure and the lives that are on the formularies of their PBMs, they effectively control all patient and all revenue flows for the entire $5 trillion healthcare industry.
[00:35:15] Cora Opsahl: I think I agree with everything you said. And I'll say over the last, you know, two years when we've gone out to RFP and I've had a lot of conversations with a lot of PBMs. I've had a lot of conversations with a lot of insurance companies.
On more than one occasion I have spoken to these consolidated entities. And said, you are trying to sell me a cost savings. Here's a high performance network. We're gonna drive this. Do copay differentials. And I finally raised my hand one day and I said, you are the one negotiating the price. Why not negotiate a lower price?
We ended that section of the conversation and they moved on, right. Because I think it fundamentally, if you are owning the provider or you own the pharmacy in the PBM world, you are negotiating with yourself.
[00:36:00] Stacey Richter: So I just wanna jump in here and say, we started out talking about, and I think we have ended in a place which validates this with three underlines and seven highlights.
That if you start getting multiple vendors in the middle to solve complexity, you wind up adding additional complexity.
[00:36:20] Mark Cuban: It doesn't have to be that way. You don't have to work with the big PBMs. And then the next question becomes, well, who does my medical right? What am I gonna do there for coverage there?
Direct Contracting as a Solution
[00:36:31] Mark Cuban: Direct contract, particularly if you're like one or two cities, you're a union, right, that's limited coverage. You can go all direct contract because you're self-insuring anyways. You're effectively direct contracting is just disaggregating the different functions from the insurance carrier. You know, get your own TPA, that's what we've done, right?
Just have all these things done independently. And then the biggest question is, what do you do for reinsurance? Because once you've got the reinsurance covered, particularly if you hire your healthcare CEO, then you are good.
Like I think for our Cost Plus stuff, we pay less than $500 per family per month with reinsurance, that starts at 50k. So once that family, hits 50k, right? Then the reinsurance clicks in.
And so for companies our size, we can afford that and it's not, we can take on that risk, but for most self-insured companies, that's the case as well. We're a smaller self-insured company, you know, with under a thousand members that we cover.
So for anybody bigger, I would go right to the hospitals and I, you know, you can look at our stuff and we publish a Cost Plus Wellness, but just sit down with the hospitals and say, we don't wanna pay premiums to an insurance company. We wanna work with you. They'll find a way.
[00:37:49] Stacey Richter: And I think one of the things that you're really highlighting here is one of the answers to all of this complexity in healthcare is that, in the current market, employers, self-insured employers have been convinced to buy discounts, which are not actually buying healthcare. And I think one of the things that you both are saying is just go buy healthcare. Just go buy drugs. Just go buy what you need.
Listen to the episode 483 with Jonathan Baran, where I go off for five minutes at the beginning about how buying discounts is the axle that a flywheel of increasing healthcare prices spins upon. And then listen to episode 483, Part 2, where Jonathan Baran offers similar advice that Mark Cuban is about to offer.
[00:38:36] Mark Cuban: The only hard part at all is putting together a network. That's it.
And in most cases, the carriers will sell you a wraparound network, you know, for $18 per member per month. And if they won't, you know, again, work with the biggest hospital system in your town and they'll find a way to do it too, because they don't like working with the insurance companies either. It's just that they don't know how to go out there and sell direct contracts and people typically just aren't coming to them.
The business of healthcare, I can't say enough, is easy. It's one of the easiest industries I've ever seen, which is why there's so much opportunity for us because again, the doctors are gonna doctor. The hospitals are going to hospital. The only questions are how much does it cost, who pays for it, and who takes on the risk?
And if you're self-insured companies covering the 160 million people under your care. You can afford to do those things. You can take the risk. You can ask for direct contracts and transparent pricing. Your members will be a thousand times happier. Your biggest hassle is gonna be dealing with the TPA the first couple times and just figuring out networks and transitioning some doctors. It's not hard.
[00:39:46] Cora Opsahl: There's two things I wanna say to that. I think it actually, it is really hard because we're asking people who have never done it before to do it.
[00:39:54] Mark Cuban: Okay, fair enough. Fair enough.
[00:39:54] Cora Opsahl: So I was gonna say, I think it's a little bit hard, but I think there's two things here. One, we're challenging people to do something different.
[00:40:03] Mark Cuban: Yeah.
[00:40:03] Cora Opsahl: Stacey, you and I were on a panel one day and she said this brilliant thing that she claims she didn't say, but I'm giving her a hundred percent of the credit, which is we need to stop talking about disruption. Because disruption means that it's working. And it's not.
So we need to be talking about change. And I think that's what you're talking about, Mark. That's what I'm talking about. We are trying to functionally change the system. And it's through the collective action, right? It's through employers coming together and saying, enough is enough.
If 160 million people are self-insured, or whatever the right number is, if we all said timeout, I'm done. Stop taking no for an answer. Get a better consultant. Get a better insurance carrier. Get a better PBM. Start with getting a better contract.
I've got a free contract for anyone who wants one on a medical contract. I'm gonna have a free PBM contract to anyone who wants it.
[00:40:54] Mark Cuban: Perfect.
[00:40:54] Cora Opsahl: In the next coming months.
[00:40:56] Stacey Richter: Listen to episode 453 with Claire Brockbank discussing said contract, and also episode 484 talking about Health Rosetta/Nautilus Health's open source contracts. That last episode was with Dave Chase.
[00:41:11] Cora Opsahl: There is so much resource out there for employers who wanna do something differently. And I think that's really your point, is that it's not that hard to do something different.
Economic Impact of Healthcare Costs
[00:41:19] Mark Cuban: Yeah, and just think about it from a macroeconomic basis, you know, we're saving 10, 11, 20% in any given month. That's a lot of money, that's a lot of cash savings for everybody.
And trying to find ways to compensate your employees more, when healthcare is going up. You can't do it. It's Catch 22. You're literally laying people off so you have enough money to cover your healthcare costs.
And then if we can get enough wholesale change to Cora's point and things really start to change, I mean, healthcare is the biggest tax, healthcare insurance is the biggest tax on the American people.
Like if you look, you know, somebody who's under the ACA family of five makes $125,000 a year for their healthcare with the premium subsidies that are still in place for this year are paying $1,500 a month, give or take, and so that's $18,000 a year, over 120. They're paying four or five times the amount in insurance premiums that they are in federal income tax.
People really don't understand that the biggest tax that they pay are their insurance premiums and that if they lose the subsidies, and we can argue whether the subsidies should stay or go, but that same family is gonna pay $2,300 a month, and that's before the $5,000 deductible and the $19,200 max out of pocket.
A family of five making a hundred, can't afford any of that. Most families, some huge percent of them can't afford it. So when employers start changing what they do to Cora's point and going to the right consultant, asking the right questions, even if it's a progression, you can't go to direct contracts, you know, year one. But slowly but surely you get involved with your own TPA, whatever it may be.
[00:43:07] Stacey Richter: Listen to episode 485 with Cristin Dickerson, MD from Green Imaging about how if you wanna dip a toe into the direct contracting waters, starting with imaging direct contracting is a decent way to go.
[00:43:20] Mark Cuban: Over time, that's how we'll change the system, and you're changing it not only for your members, but for the entire country.
Because we'll all learn that there is a better way. And that tax that we pay in healthcare insurance, I mean, we've gotta start realizing that's exactly what it is. It's a tax that's put on, not by the federal government, but by the insurance carriers. It's paid directly from our tax monies, that $1,500 a month with the $800 ACA premium subsidy, that $2,300 a month now is paid directly to the insurance companies.
[00:43:57] Stacey Richter: It's a tax on both sides because you're paying the tax. But then you're also funding taxpayer paid …
[00:44:05] Mark Cuban: Yeah. You're getting hit twice, right!
[00:44:06] Stacey Richter: … carrier.
[00:44:06] Mark Cuban: Your tax dollars, your tax dollars are, you know, plus your insurance premiums.
[00:44:10] Stacey Richter: Like half of the federal budget or something like that, or even more is going to healthcare. So yeah.
[00:44:17] Cora Opsahl: We've done similar math for our population that you were just going through in the sense that over the last 10ish years, wages went up 50% for our union members, which is incredible. Meanwhile, healthcare costs went up 230%.
[00:44:32] Stacey Richter: Listen to episode 487 with Kevin Lyons about the state of New Jersey Health Plan, which is even worse if I'm remembering right.
A family health plan is now $67,000 a year for state workers and members pay 35% of that cost. That is a lot of money for a teacher or a firefighter or a police officer or anybody.
[00:44:54] Cora Opsahl: And we know that had healthcare costs just gone up at the rate of inflation, just the rate of inflation. Our members would have more than $5,000 annually in their pockets. That's groceries. It's a vacation. It's school books. It's real things that allow people to have a life.
And I think that's the other piece is that when we talk about high deductible health plans, when we talk about the complexity of healthcare and all of these things, is that these are choices then that every single everyday Americans have to make.
Do I put food on my table, gas in my car? And we shouldn't have to put people in a position where they have to pick between food and healthcare.
[00:45:32] Mark Cuban: Cora does a phenomenal job and I think what she's able to do and the progression she's on can change the country. And for my smaller companies, if a union came to me and said, okay, we'll negotiate wages, but in exchange for us negotiating wages, collective bargaining, we're gonna give you access to our healthcare that core negotiated, it would more than pay for itself.
You know, I'd end up probably saving money and most companies don't understand that, but there's these laws that prevent it from happening. And who knows.
[00:46:01] Stacey Richter: We should get Cora to be the CEO of healthcare.
[00:46:05] Mark Cuban: I agree with that. I'm voting for that all day, every day.
[00:46:08] Cora Opsahl: I also think, Mark, there's probably a lot of union leaders who really like what you just had to say. So.
[00:46:13] Mark Cuban: Lot of 'em don't though. I brought it up to a bunch of 'em and that's like too much work. When you talk to doctors, right? The core in nurses. Not like their wages went up that much.
[00:46:22] Cora Opsahl: I mean, I think that goes back to the power piece that we've been talking about. Because let me be clear that when we've talked to hospitals, their first complaint is the, it's the nursing wages that's really causing them to raise their prices. But there's been, it's just not true.
[00:46:34] Stacey Richter: Listen to the podcast with Vivian Ho, who has much to say in a very well evidenced way about that comment.
Episode 466 with Vivian Ho, an economist who does all the math, and concludes that clinician wages have not by any stretch, gone up the same rate as hospital prices have gone up.
[00:46:55] Mark Cuban: I did a study probably seven years ago. I hired this company outta DC and I had just asked a simple question. Hospitals will tell you they can't live at Medicare rates. You know, they need higher rates, which isn't true 'cause they have to have pianos, they have to have extra wings, all that stuff.
So I said, okay, medicine in Canada, let's start with Toronto. Does the cost of a building in real estate cost more or less Toronto versus Manhattan? Cost more in Toronto.
Nurses. Nurses and doctors, do they get paid more in Canada or the USA? Little bit more in the USA, but it's really, really, really close.
Band-Aids, you know, a hip implant, prosthesis, whatever, right? The implants cost more in Canada, you about the same.
So why is it that Canadian hospitals break about even and get paid 30, 40% less than Medicare for the top 50, at least back then for the top 50 procedures? And they, some of them make a little money, most lose a little break even off their budgets.
What is it that's making it so that you know American hospitals and these towns can't at least break even at those costs? It's because they just want to grow. Right? That's how, that's where the reward is. The bigger you get, the greater the rewards. Whereas in Toronto, they're not just growing their hospitals left and right.
And so it's the incentives that are different. It's not the ability to provide the care at a lower cost.
[00:48:21] Stacey Richter: Yeah, and that's a really, really important point. It's what are we trying to do here? I mean, we could just go back to very much basics.
What is the point of having a health plan at an employer? Is it to get members better health? And it's the same thing with hospitals, like what's a hospital supposed to be doing here?
Is it adding beds and consolidating, or is it potentially improving the health of the community? Like if we really just wanna get very De Novo about this whole thing. And really start getting back to like, what are we even doing here.
[00:48:49] Mark Cuban: And where do we wanna go, right? Do we want universal healthcare or single payer or Medicare for all?
Well, you can't get from here to there without transparency and costs. What are all these hospitals going to do with all the digital technology, robotic surgery, all that stuff? How are they gonna get paid and still advance the technology to the point where we improve patient care?
And the only way to do that is to have complete transparency. So that if the city of Dallas wanted to be a single payer union, right, where you cover all costs for all employees, well, if you knew what all the costs were going to be based off your population with a little bit of actuarial projections, right, or statistical analysis. You could make that choice. A state can make that choice.
[00:49:36] Cora Opsahl: I mean, the reality is healthcare is one of the only commodities that you buy with never knowing how much it's gonna cost.
[00:49:42] Mark Cuban: We a”re changing that a little bit, but on on the healthcare side. Exactly right.
Transparency and Simplification in Healthcare
[00:49:46] Stacey Richter: We started out this conversation on the premise that sometimes the solution is worse than the original problem, and we started out talking about high deductibles.
Then we pivoted into, Hey, this is really complicated. Maybe we should get some help here.” And I think what we have ended up with at the really highest level is that these factors add up to these solutions have resulted in a lack of transparency at any way that you look at it. It is so not transparent. The unknown unknown is the biggest part of the Venn diagram in some cases.
Then we also have pricing failures at a magnitude, which is to quote you, Mark, “insane.”
So if we're starting to think about how do we fix this, we've come up with a number of different fixes. One of them is direct contracting, but even, even before that, get a CEO, get a leader of the small insurance company that many employers are running off the sides of their desks.
You gotta be able to negotiate. You have to be able to figure out what the strategic imperatives are. I mean, this is really a leadership position. You have to, maybe you wanna have a doctor just saying who's weighing in a medical director of some kind, who actually, you know, knows …
[00:50:55] Mark Cuban: Doesn't hurt
[00:50:55] Stacey Richter: … medicine.
So those are, I think, the main kind of takeaways that I'm taking away from this.
Final Thoughts and Solutions
[00:51:01] Stacey Richter: I'm gonna ask Cora first, and then I'm gonna ask Mark to bring us home here and land this plane. But Cora, do you have anything that you want to add?
[00:51:08] Cora Opsahl: I would say you can't fix what you can't see, and that is fundamentally one of the challenges we've got in healthcare.
You can't see the rising prices. You can't see. Who's in network, who's out of network. You don't always know what you're gonna get. You can't see quality, you can't fix what you can't see.
But I really fundamentally believe it really is the collective action of employers, of folks like Mark and Cost Plus and what we're doing.
And some of you know Kevin Lyons and a lot of the guests you've had on your podcast over the last few years, Stacey. It is the collective action of these voices who are saying, “Enough is enough.”
We have always said healthcare costs are unsustainable. I think it's about time we look, start to look at things a little bit differently, and that's what we're trying to do.
[00:51:52] Mark Cuban: Amen. I would just tell you, if I was trying to come up with a solution, right, I'd go back to what I said about hospitals offering credit. Think of it this way, if there were no insurance companies. Period. End of story. None, zero.
And everybody was responsible for paying for their own healthcare at some level and determining what doctors they wanted to work with.
If those providers were able to offer credit, but the pricing, let's just say if they offered pricing that was Medicare, just to use that as a foundational number.
I think the solution then becomes, if the federal government is willing to guarantee that credit risk so that that provider, as long as they're charging Medicare or under, and maybe some other established price for services like MRIs, etc, and taxpayers absorb that risk as long as the credit pricing was means tested. Somewhat like Medicare does. You know how the Medicare premiums, it's 2%.
If you're FPL, you know one, or you know 150% of FPL you'll pay 2% of etc, up to eight and a half percent. If we did something like that, then providers would all get paid so they wouldn't have to play all these games with facility fees and all the other garbage.
Insurance companies, insurance would no longer be a barometer for healthcare. They'd be out of the mix completely, and it'd be, you know, back to the future, you know, 1955, where here's the price list. You walk in if you want to have your baby at this hospital, it's this amount. If you don't have the money, they'll provide you credit.
And if you're making, you know, X amount of money, let's just, and you could even pick a parameter that says if you're under 200% of federal poverty level for individual or family, the government will cover it, right? Because that's effectively Medicaid levels.
I think the system gets fixed just like that, you know.
Now whether or not you can get providers to work at a Medicare level, to be determined. Is there a different price point? But that goes back to what Cora said. What's the price? Once we get that, who pays for it? Pay for what you can afford to pay for. Who takes on the risk of nonpayment. The taxpayers can do it as long as they have full audits of all the providers, right?
Let the providers in this day of AI provide their every general ledger entry that they have so you can just look to see what they spend all their money on. If you're willing to be transparent like that, so we all trust you, you'd cut the cost of healthcare significantly. Just the 20% that everybody says is administrative costs, gone.
The simplicity, simple back to 1955 where you can pay with a credit card, cash, or a chicken.
[00:54:32] Stacey Richter: I like that. Trust and simplicity was in that last sentence that you said, which
[00:54:38] Mark Cuban: Wouldn't that make sense though? Wouldn't it make sense.
[00:54:42] Cora Opsahl: Stacey—Trust, Simplicity, and a Chicken.
[00:54:46] Stacey Richter: That's gonna be the title of this episodes.
[00:54:48] Mark Cuban: The question is, what's the question?
[00:54:50] Stacey Richter: Mark Cuban and Cora Opsahl, I thank you so much for being on Relentless Health Value today.
[00:54:53] Mark Cuban: Thanks so much, Stacey. Great as always.
[00:54:55] Cora Opsahl: Thank you Stacey.
[00:54:56] Mark Cuban: Thanks, Cora.
[00:54:57] Cora Opsahl: Thanks, Mark.
[00:54:58] Mark Cuban: Hi, this is Mark Cuban of costplusdrugs.com, and not only do I listen to every episode of Relentless Healthcare Value, but it is the most incredible, stupendous, amazing healthcare podcast in the history of all healthcare podcasts. So make sure to listen every single time.