Mark Cuban Says CEOs Don’t Understand Health Care And It’s Costing Them.. BIG!

Mark Cuban is getting a lot of publicity resulting from his Cost Plus Drug model. The attached article has an interesting byline. Cuban says, “CEOs don’t understand health care coverage, and it’s costing them big.” That is very true and it is because the common practice of employers who provide health insurance to their staff take little time in evaluating how much they are overpaying for the medical and pharmacy services that their group is using. When you are talking about CEO’s of multi-billion dollar companies, however, a lot of that waste can be absorbed without as high an impact as this waste or excess cost has on small and medium-sized groups.
Our experience has shown that the biggest hurdle to addressing the high cost of an employee benefit plan is the unwillingness of an employer or their HR managers to take the time to acquire detailed information about actual claims cost versus the inflated premiums being charged to cover it up. The spread between premium charged small and medium size groups and actual cost of Rx and ongoing medical service needs is eye-popping. Cuban is right. The most egregious and predatory spread is in the pharmacy component. Of course the PBM response is the usual “we are saving everybody money.” I still can’t figure out how PBM’s are saving everybody money by marking up the cost of drugs to a health plan as much as they do and obscuring that fact with so many hidden gimmicks.
Further, the article cites the comments by Neera Tanden, a domestic policy advisor to President Joe Biden who says that “… PBMs play a critical role in negotiating lower drug prices…” Well, that may be true, but the beneficiaries seem to be the insurance companies, not the group plans. A simple step in the right direction for groups to lower costs is to bypass and eliminate middlemen. The first place to start is by doing this with the large PBM’s. Just as we’ve always advocated, employers and independent pharmacies should be working together directly.

Howard Danzig, President of The ECCHIC Group

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