Billionaire businessman Mark Cuban is taking an aggressive stance against healthcare companies growing more resistant to consumers, regulators and now the legal system, largely in the name of profit.
“Look at the healthcare industry,” Cuban wrote in a recent post on X. “Multi-hundred-billion-dollar conglomerates that get sued daily. Literally. Daily. Lose most suits. Against cities. States. Feds. Get fined hundreds of millions in individual suits. They are too big to care.”
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Cuban argues that large healthcare companies can treat lawsuits and government fines as a cost of doing business because the financial upside from questionable practices may exceed the eventual penalties.
That scenario leads to what he calls “enforcement arbitrage,” a business dynamic where a company can profit from breaking or pushing the limits of rules because the financial consequences of enforcement are smaller than the gains from the conduct.
“The Feds/states don’t have the resources to pursue us all,” Cuban noted on X. “And for civil suits, they [big healthcare companies] will delay and lobby, and their lawyers will be better. More importantly, they know they make more money than they can extract from them.”
Healthcare experts say the incentive problem Cuban is describing is real.
“If the economic benefit of a practice is immediate, while detection, litigation and any eventual remedy happen years later, enforcement can become a weak counterweight even without anyone literally budgeting for a future fine,” Kirat Kharode, founder and CEO at HealCo and a former hospital system executive, told Moneywise.
Healthcare makes this scenario especially difficult because the conduct is often buried inside contracts, reimbursement arrangements and highly concentrated local markets.
“By the time a dispute is resolved, the market may already have changed,” Kharode said.
Enforcement arbitrage is in play
Enforcement arbitrage is akin to financial arbitrage, where a stock market trader, for example, exploits a price difference between two markets. In business, enforcement arbitrage exploits the gap between the economic benefit of questionable conduct and the expected cost of getting caught and punished.
For example, a pharmaceutical giant may profit from a controversial product and make $1 billion selling it. Lawsuits may follow, with $200 million paid out in settlements and regulatory penalties. That leaves a net economic benefit of $800 million for the drug company. Under that hypothetical, even losing lawsuits or paying fines doesn’t necessarily deter the behavior. The penalties can effectively become just another cost of doing business.
In his recent X post chain, Cuban calls for a tri-partisan commission to set guardrails on what big healthcare companies can do at a time when AI appears set to make those companies even more powerful, and fight back against enforcement arbitrage.
That’s where the independent commission comes in.
“We have to recognize we don’t know the best answer yet,” Cuban noted on X. “As much as I hate committees or panels, that’s where we have to start. An organization, funded by taxpayers, with all variety of stakeholders, with the frontier model reps being in the minority, working to put together the research and suggestions to deal with this.”
AI makes policing big healthcare companies more difficult
In his X post, Cuban called for a tri-partisan commission with “Reps, Dems, independents” to police healthcare companies looking to exploit arbitrage gaps and profit from them.
“Who picks this?” he wrote. “This is the hardest part. Maybe we take someone from the GAO office who has served at least 20 years. They don’t need to be AI experts. They need to know how to be nonpartisan and manage.”
But any credentialed healthcare oversight commission should avoid a regulatory system that can only reconstruct what happened years after the market has moved on, Kharode added.
“Healthcare has decades of rules, reporting and enforcement, yet many important economic decisions happen inside contracts and operating workflows long before a regulator or purchaser sees their effects,” he told Moneywise. “With AI, the government should preserve access to evidence, decision lineage and auditability from the beginning rather than trying to recreate them after harm occurs.”
Another lesson is to regulate mechanisms rather than simply company size. “A large company isn’t automatically behaving badly, and a small company isn’t automatically behaving well,” Kharode stated. “Understand the incentive, identify the conduct you’re trying to prevent and make the consequence close enough in time and magnitude to affect the decision.”
Cuban’s proposed independent panel
Independence also requires more than putting industry representatives in the minority of any healthcare regulatory commission.
“I’d want transparent conflicts and compensation, fixed terms, public reasoning behind recommendations, access to independent technical expertise and published minority views when members disagree,” Kharode noted.
Most importantly, the panel should be judged by whether its recommendations can be translated into enforceable rules and measurable outcomes.
“Healthcare has plenty of advisory bodies and reports,” Kharode added. “The harder problem is closing the distance between identifying a problem and changing the behavior that produces it.”
Meanwhile, Cuban appears committed to holding healthcare firms accountable. The same day, he posted on X about enforcement arbitrage and shared a post about the Ohio Chamber of Commerce suing United Health for “improper actions.”
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This article originally appeared on Moneywise.com under the title: Mark Cuban says healthcare companies are sued daily, usually lose and are ‘too big to care.’ He has a better solution
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