Mark Cuban and Healthcare Competition

Market competition accomplishes what decades of regulation haven't

By Ryanne Swanson & Raymond J. March of The Independent Institute. 

"Payton Herres successfully underwent heart transplantation surgery as a preteen. A year later, she began taking everolimus—a vital medication used to prevent her body from rejecting the transplant. Her insurance provider soon after denied coverage, leaving her with an indispensable but largely unaffordable prescription.  

Herres’ situation was alarming, but not uncommon. About 30% of Americans find themselves with uncovered treatment despite having health insurance. Unfortunately, medications for rare and/or chronic conditions, in some cases, have no generic alternatives. Not covering expensive but seldom-utilized treatments is an easy way for health insurance providers to cut costs. Unfortunately, these decisions can leave unsuspecting and financially strapped policyholders with few options. 

This is when Mark Cuban stepped in.  

Mark Cuban Cost Plus Drugs, an online pharmacy, helps many people in these situations access affordable medications, even without health insurance. Once unaffordable, his pharmacy now supplies Herres with a 90-day supply for about $300. In comparison, she likely faced bills ranging from $400 to $13,000 per month elsewhere.  

Cuban’s efforts are laudable, and in this case, probably lifesaving. And thankfully for many other patients, other efforts have been just as successful.  

Diabetic patients who need insulin can also face insurance gaps limiting access to life-prolonging medication. Like everolimus, insulin can be alarmingly expensive without coverage. Yet despite political promises and actions to make insulin more affordable, competition has quietly delivered for decades. Perhaps the most recognized example is ReliOn, which is available for about $25 a vial at Walmart pharmacies across the country. In some states, ReliOn is available over the counter.

During the nearly two-year GLP-1 shortage, many patients hoping to treat severe and complex forms of obesity were left without regular access to Ozempic, Mounjaro, and other injectable weight loss treatment options. Fortunately, copycat pharmacies and telehealth providers worked to help patients access generic-like treatments, even as insurance coverage struggled to keep pace with challenging market conditions. In this case, online pharmacies were so effective that they forced brand-name GLP-1 treatments like Zepbound to half their prices during a national shortage. Prior to the copycat and telehealth competition, some patients found themselves facing $1,000 prescription drug costs.  

These and other examples highlight a vital- but often overlooked- lesson about competition. The US healthcare industry is extremely regulated, particularly pharmaceuticals. And despite literal decades of political promises to expand coverage and lower prices, we’ve yet to see reform provide solid and consistent examples of either. Conversely, a relatively small online pharmacy and other unexpected retailers were able to provide what a larger health insurance provider and a torrent of regulations did not or could not- affordable medication. 

Sometimes a small dose of the right treatment is all you need." 

The never-ending ferry tale: Why Washington shouldn’t subsidize ferries

By Steve Swedberg of CEI.

"The Trump administration recently announced $664.8 million in federal grants for ferry infrastructure, including $28.2 million for North Carolina’s Cherry Branch Ferry Terminal. That caught my attention because before joining CEI, I was a transportation fiscal analyst for the North Carolina General Assembly. I had firsthand exposure to the North Carolina Department of Transportation (NCDOT) and its Ferry Division, including touring its vessels and shipyards.

The timing of the grant is particularly curious. North Carolina is now undertaking a performance audit of the Ferry Division, with the State Auditor required to report its findings by January 15, 2027. So as Raleigh asks how to make its ferry system more sustainable, Washington is sending North Carolina $28 million. That raises a more fundamental question: why is Washington paying for ferries?

North Carolina has spent years wrestling with the costs of its ferry system. Several routes historically carried passengers and vehicles without charging fares, while NCDOT reported insufficient funding for capital needs, including millions of dollars in unfunded vessel replacements. A 2017 General Assembly evaluation found opportunities to increase fare collections and reduce costs by adjusting fares and cutting low-demand crossings.

Meanwhile, the state’s ferry fleet has grown older and more expensive to maintain. Many vessels date to the 1980s and 1990s, and the Ferry Division has struggled to keep pace with maintenance needs. Its shipyards lack sufficient capacity to handle all necessary work, which has required NCDOT to turn to outside contractors for some repairs, at taxpayers’ expense.

After decades of subsidized ferry service, North Carolina is finally asking users to pay more. A 2026 law requires NCDOT to begin collecting tolls on all ferry routes by January 1, 2027, although the toll rates have not yet been finalized. That may be a step toward fiscal responsibility, but it comes after the state has accumulated substantial maintenance and replacement needs.

North Carolina isn’t the only state or recent grant recipient in this same boat. Alaska’s Marine Highway System acknowledges that fares alone don’t cover operating costs. Washington State Ferries recovered less than half of its operating costs from fares in 2024. Maine requires state support for half of its ferry operating costs and funds the system’s capital expenses, while Virginia’s Jamestown-Scotland Ferry charges users nothing.

These ferry systems operate under different circumstances and conditions. Yet in all cases, users do not pay the full cost to provide the service.

This is where economist and Nobel Prize winner Ronald Coase’s famous analysis of lighthouses provides enlightenment. The lighthouse was once the textbook example of a service that government supposedly had to provide because charging individual beneficiaries was difficult — the very definition of a public good. Coase challenged that conventional wisdom by showing that privately operated lighthouses existed and that ships could be conveniently charged for their use.

A ferry has an even more straightforward financing mechanism because its beneficiaries are readily identifiable, and passengers and vehicles can be charged directly. If a ferry provides enough value to justify its cost, its users should bear much more of that expense. This “user-pays” principle applies to transportation generally — even the gas tax is a user fee for road use.

And if policymakers believe a route is worth providing despite its inability to cover its costs, they should have to justify that decision to the taxpayers who fund it. There is no reason to make taxpayers in Ohio or Idaho finance a ferry in North Carolina.

The problem gets worse when the administrative state joins the financing equation. The Federal Transit Administration can cover up to 80 percent of eligible ferry capital costs, including vessels, terminals and related infrastructure. When Washington pays most of the capital bill, state policymakers have less reason to ask whether the people benefiting from that investment are willing to finance it.

Without that subsidy, policymakers would face harder questions: Is the route worth operating? How often should it run? What should users pay? How much should taxpayers subsidize? Is there a better way to provide the service? Federal subsidies make it easier for states to avoid answering those questions because someone else is footing most of the bill.

Ferry service may be important to the communities that use it, but that does not make it a federal responsibility. Federal subsidies shift the costs of state and local ferry service onto taxpayers who may never use it. Washington should stop turning local transportation choices into national obligations. Otherwise, the question, “Who pays the ferryman?” will have a simple answer: the taxpayer."

Hit the Brakes Hard on Trusting Government

From Don Boudreaux.

"Here’s a letter to the Wall Street Journal.

Editor:

Peggy Noonan is so frightened of AI that she not only calls on investors to stop funding it, but on government to “hit the brakes hard” on this technology (“Pause AI for Humanity’s Sake,” September 11).

Ms. Noonan imagines AI unleashing a terrible dystopia. Yet what we imagine should be informed by the past. Ms. Noonan’s imagination isn’t. Were she to consult the past, she’d encounter a few realities beyond the obvious one that countless technologies that we today celebrate were, when introduced, reproached as imperiling humanity.

One such reality is that when insiders stir up alarm about their own industries, they’re often angling for regulation that shelters them from competition. As classic case involves AT&T: it warned that telephony would collapse into chaos unless regulated as a natural monopoly. Established bankers played the same game during the Depression, warning that, without government-imposed interest-rate ceilings, ruinous competition for deposits would breed financial crises. In each case the peril lay less in the absence of regulation than in the ‘cures’ – a fact that points to a second and more fundamental reality: a far greater danger than new technology to humanity is government authority to regulate technology.

History gives us every reason to distrust government with the awesome power to determine just how new technologies will develop, and how and when we should be permitted to uses these technologies. In short, history teaches that the wealthiest and safest societies are ones in which innovation is, as Adam Thierer calls it, “permissionless.” If we’re to hit the brakes hard, it should be on the ages-old, fear-fueled impulse to put control of economic forces and technological advances into the hands of politicians and bureaucrats."

Why Congress Shouldn’t Change SNAP’s New Payment Error Approach

By Angela Rachidi of AEI.

"Payment errors in the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) have received considerable attention in recent months. While much of the debate has revolved around the One Big Beautiful Bill Act’s (OBBBA) new requirements surrounding SNAP payment errors and the impact on states, many have overlooked the people most affected by improper payments—low-income households.

The national SNAP payment error has hovered around 10 percent in recent years, accounting for almost $10 billion in erroneous SNAP benefits yearly. Some of this is fraud, but much of it involves correctable mistakes by participants or government eligibility workers. Thanks to the OBBBA, states are now financially incentivized to lower their payment error rates because states are required to fund a portion of SNAP benefits if they climb above a payment error rate threshold.

Facing the prospect of substantial financial penalties if they do not lower their error rates, states have begun to tighten their eligibility process. As Congress works toward reauthorizing SNAP through a new farm bill, it must resist calls to weaken this cost-sharing requirement or otherwise alter SNAP’s payment error formula.

The OBBBA requires states to contribute a share of total SNAP benefits issued in their state starting in fiscal year (FY) 2028, unless their SNAP payment error rates fall below a 6 percent threshold or they are otherwise exempt. Only 10 of the 53 states or territories met this threshold in FY2025. If a similar trend holds for FY2026, states will be required to pay up to $11 billion collectively in annual SNAP benefit costs in future years. This stands in stark contrast to the period preceding the OBBBA, in which the federal government covered benefit costs entirely, leaving states to face little to no penalty for high payment error rates.

Given this blunt reality, some have called for delaying the payment error cost share or ending it entirely. Some have even suggested that states will discontinue SNAP if the payment error cost share is not delayed. Other arguments have pointed to a lack of symmetry in the payment error calculation itself, which penalizes underpayments. These arguments may fall on sympathetic ears, with Senate Republicans proposing to delay OBBBA’s payment error requirements in an attempt to pass a farm bill. However, these arguments overlook the negative effects that SNAP payment errors have on low-income families. The best approach is to leave the SNAP payment error formula as it is and fully implement the payment error cost-share requirement as OBBBA intended in FY2026.

Delaying or eliminating the cost-sharing requirement accepts the current high level of SNAP payment errors. While it is true that the vast majority of SNAP payment errors are overpayments rather than underpayments, SNAP households are still negatively affected by overpayments. For example, federal regulations require that state agencies establish a claim against households that receive an overpayment, in an attempt to collect on those claims. Once overpayments are discovered, recouping them can happen by reducing the amount of future SNAP benefits, which can put a strain on a household’s budget or potentially discourage them from participating altogether.

Although research suggests that less than 20 percent of overpayments are eventually recovered, this process can disrupt assistance, requiring recipients to submit additional paperwork or lose eligibility. Avoiding overpayments will ensure that families consistently receive the resources that they need to meet their food needs.

Furthermore, while changing the payment error formula could create symmetry in the treatment of overpayments and underpayments, the consequences of underpayments are immediate and directly harmful to low-income households. This is likely why overpayments will always be more common than underpayments. State workers may be particularly sensitive to underpayments due to the immediate consequences they can have for recipients—an important consideration for treating underpayments differently than overpayments. However, state workers also need strong incentives to avoid overpayments. Requiring a state financial contribution when payment errors exceed a certain threshold will save the federal government money, but it will more importantly avoid disrupting SNAP benefits for participating households.

The Agriculture Improvement Act of 2018 has been operating on a one-year extension since FY2023, making Congress overdue to pass a new farm bill. The farm bill not only sets agriculture policy for the country but also authorizes SNAP, including the treatment of payment errors. The House of Representatives passed a new farm bill in April 2026 that maintained OBBBA’s payment error approach, but the Senate failed to pass a companion bill even after agreeing to delay the payment error cost share. The Senate’s failure offers a good opportunity to leave OBBBA’s payment error approach as intended."

Growth through innovation bursts: Why industrial policy should not bet on size

By Giuseppe Berlingieri, Maarten De Ridder, Danial Lashkari and Davide Rigo. Excerpts:

"Industrial policy is back on the agenda across advanced economies, with a growing channelling support towards large incumbent firms on the premise that they are the most capable innovators. This column uses data on French manufacturing firms to argue that this premise deserves scrutiny. Firms become large primarily through occasional, large 'innovation bursts' rather than by innovating at persistently higher rates. The arrival of these bursts involves an element of chance, so a firm's current size says little about how much it will innovate in the future. Policies that entrench the position of incumbents may therefore slow down the churn that sustains aggregate growth."

"This column is not an evaluation of any specific industrial policy programme, and our discussion has abstracted from any strategic and security motives behind much of the current debate. Our results also do not imply that scale is never efficient: some technologies – notably intangible-intensive ones with high fixed and low marginal costs – feature genuine returns to scale and ignoring this would be costly (De Ridder 2019, 2024, Lashkari et al. 2024). Our findings do suggest that policymakers therefore face a trade-off between accommodating such scale effects, and entrenching incumbents whose size reflects the luck of past innovation bursts. An industrial policy that shields incumbents from that displacement risks slowing the growth it aims to promote." 

Decades Of Ice-Related Climate Misinformation Drove False Claim That Glacier Collapse, Rather Than Bedrock, Caused Nepal Disaster

Egg on their faces, activist scientists and journalists are now blaming “melting permafrost,” but there’s no evidence for that either

By Michael Shellenberger. 

"Anthropogenic climate change caused a glacier to melt, triggering the flooding in Nepal, said scientists and journalists immediately following the disaster. “Climate change is heating up the Himalayas and supercharging the risk of disasters like the deadly flash flooding in Nepal and Tibet,” the New York Times reported on August 27 under the headline “Climate Change Raises Risk of Disasters Like Nepal Floods.” Explained the Times, “As humans warm the planet by burning fossil fuels, the Himalayas are losing their permafrost” and “the thawing permafrost is destabilizing the foundation underneath glaciers, raising the risks of precisely these kinds of landslides and glacial collapses.” It quoted Ashim Sattar of the Indian Institute of Technology Bhubaneswar: “There’s a very straight link between climate change and these types of disasters.” Alton Byers of the University of Colorado told the Times, “Permafrost has been the cryospheric glue that’s held the rock and the ice and the glaciers together for millennia, and now we’re getting increasing evidence that it’s being weakened by warming trends.” Three days later the Times told readers that “one thing seems certain: The risk of such events is increasing.”

But new satellite imagery reveals that the bedrock beneath the glacier collapsed, bringing the glacier down on top of it. “You have this big bedrock failure that took part of the glacier with it,” said geomorphologist Dan Shugar. His colleague Kristen Cook described it as “a collapse of a large piece of bedrock that was sitting below the glacier. The ground underneath the glacier collapsed and took the glacier with it.” Another glaciologist, Jakob Steiner, agreed, explaining that “You basically had the lower part of a glacier tongue that sheared off because the rock below failed.” Cook told the New York Times that “The rock that the glacier was sitting on collapsed,” and yet the Times headline is “Landslide Along With Glacial Collapse Likely Set Off Nepal Flooding, Scientists Say,” which is misleading in that it was the landslide that brought down the glacier. “Essentially, a chunk of the mountainside collapsed,” Shugar told the Times."

Capital Is Not Taking Half of America’s Income, and Other Myths About the “Labor Share"

By Richard DiSalvo, Erica York.

"Economists and journalists have been pointing to a labor share of income series from the Bureau of Labor Statistics (BLS) as evidence that capital is taking an ever-increasing slice of the economic pie. By that series, labor’s share fell from nearly two-thirds in the 1950s to about half today, fueling headlines like “US workers’ share of national income falls to a new low.” 

But a closer look at the national income accounts shows a different story. Labor’s share is both higher and more stable than the BLS series suggests.

Capital Takes Between 17 and 24 Percent, Not Half, of Gross Income

Most recently (Q2, preliminary), the BLS series reports 53 percent of income accrues to labor, leaving 47 percent to nonlabor, which commentators call “capital” or “owner” income. But in that commentary, the definitions of income and the underlying assumptions BLS uses to split it often go unclarified. We untangle those assumptions below; but first, we build directly from the national accounts to show how total US income divides to capital and labor, then contrast that with the BLS series.

Gross domestic income totaled roughly $32.2 trillion at an annual rate in the second quarter of 2026. Of every dollar, 50.4 cents were paid to workers as compensation: 41.5 cents of wages and salaries plus 8.9 cents of benefits. This is unambiguously labor income. But it does not necessarily follow that all 49.6 cents of the “nonlabor” income accrue to capital.

The income unambiguously paid to capital includes corporate profits after corporate tax, interest, and rents, and this amounted to nearly 17 cents. About 3.6 cents of that is “imputed rent,” an estimate of what homeowners would pay to rent their own homes. Imputed rent is not actually cash that people collect and is not what people typically think of as “capital income.”  (The national accounts also include the “current surplus of government enterprises,” which operate at a loss, and thus account for a small, negative value, which we exclude.)

Another 6.7 cents were the income of proprietorships and partnerships, a mix of pay for the owners’ work and return on their investment. If this is entirely attributed to return on investment, capital would still only earn 24 cents per dollar of gross income—far less than half.

Gross Income Overstates What Households Actually Receive

The remaining categories of “income” deserve a closer look, because they aren’t income that accrues to anyone.

Depreciation takes nearly 17 cents of every dollar. This is the cost of replacing worn-out buildings, equipment, and software; each year, this spending returns the capital stock to where it started, and it never makes its way to a paycheck or a brokerage account.

Taxes are collected before income ever reaches a household: 7.0 cents in taxes on production and imports (TOPI, including sales and property taxes, federal excise taxes, and customs duties net of subsidies) plus 2.8 cents in corporate income taxes.

Using a gross measure to attribute non-labor income to capital counts these categories as accruing to capital even though they never show up as capital income. That creates a particularly odd position for many commentators when it comes to tariffs. Every dollar of tariff revenue mechanically raises the “nonlabor” share of income and is thus categorized as “capital income.” Analysts’ interpretations of tariff incidence vary, but no common interpretation considers tariff revenue to be capital income.

 

Labor’s Share of Net Income Is Within Historical Levels

Removing depreciation and taxes leaves net income. In the second quarter of 2026, that leaves roughly $23.7 trillion of private sector income that was actually paid out to people.

A leading literature survey on the labor share distinguishes between income that unambiguously belongs to labor (employee compensation), income that unambiguously belongs to capital (profits, interest, and rent), and the ambiguous remainder (proprietors’ income, after excluding taxes). Tracking these three categories as shares of net income since 1947 tells a clean story and changes the picture substantially from the headlines.

 

Unambiguous labor income has made a round trip: it was about 69 percent of net income in the late 1940s, rose to about 75 percent in the 1970s, and is 68.3 percent today. Labor share, in other words, is not at a “never before seen” level.

Unambiguous capital income has risen from about 13 percent of net income in the late 1940s to 22.6 percent today. More than half of that rise has come since 2000, when it stood at 17 percent, with the largest jump coming during the pandemic years of 2020 and 2021 (before the release of AI tools).

The ambiguous proprietors’ slice fell from about 18 percent of net income in the 1940s to about 10 percent by 1970, driven largely by the decline in farming. It fell to a low of around 6.7 percent in 1982, then recovered to roughly 9 percent to 10 percent, most recently measuring 9.1 percent.

The nature of proprietors’ income is ambiguous. Assign it entirely to labor, and capital’s share stays at 22.6 percent of net income, the “unambiguous capital share” in the nearby chart. Or assign it all to capital, and capital’s share rises to 31.7 percent of net income—this is the approach we take to reach the highest capital share we can infer. The truth is somewhere in between, but recent research suggests proprietor income is mostly labor, so even our 31.7 percent estimate—still far below half—is likely too high.

Because proprietor income has been a relatively stable share since the late 1980s, no fixed (time-invariant) allocation of it between labor and capital can drive recent trends, although an allocation that itself changes over time can. A time-varying allocation is one of several drivers of the BLS trend, which we discuss next.

Estimating Labor Share and Assumptions Behind the BLS Approach

A labor share estimate requires dividing income into two categories: labor and capital.

In the corporate sector, the split is easy: wages on one line, profits on another. Indeed, some economists restrict their analysis to the corporate sector for this reason. For noncorporate businesses, it must be estimated, since their income is a mix of labor and capital. Government, nonprofits, farms, and the imputed rent on owner-occupied housing are often excluded.

Every published labor share estimate must make assumptions about noncorporate actors, and these assumptions can move the level and trend.

The BLS measure uses an imputation strategy to split the noncorporate business sector into labor and capital income, producing a time-varying allocation. It only covers the nonfarm business sector, or about three-quarters of the economy. This contrasts with using the national accounts, which keeps all income under one fixed convention.

Let’s start with the BLS split of proprietor income. BLS assumes proprietors “pay themselves” the average hourly compensation of employees in the sector times their hours, and treats whatever is left as capital income. Because hours per worker move slowly, this is essentially a comparison of two averages:

The result has shifted enormously; we estimate BLS’s inferred capital share of proprietors’ income rose from less than a fifth in 1990 to about half today, in line with trends documented by Elsby, Hobijn, and Şahin through 2012.

Then let’s look at the omissions. Government and nonprofits, roughly 15 percent of the economy, are excluded; including them, as BLS economists note, would increase BLS’s estimated labor share. Farms are also excluded; this matters little today but makes historical comparisons anachronistic, as farm proprietors’ income was 6 percent of the total in the late 1940s.  

Finally, the BLS ratio divides income-side compensation by product-side output, so the bookkeeping gap between GDP and GDI (the “statistical discrepancy”) can affect the trend. Our approach uses the income accounts throughout, so all components sum to total income by construction.

Correcting the Headlines

The description of the labor share as “unprecedented” or “record low,” the “close to 50-50 split,” and the commonly shared figure depicting a trend downward since the 1940s are all misleading. Labor earns about half of every dollar of gross income, but the remainder should not all be attributed to capital—much of what is counted in gross income does not accrue to anyone. A better measure uses net income, and the share of net income accruing to capital is between 22.6 percent and 31.7 percent, depending on how proprietors’ income is treated. The labor share is back to a historically precedented, not “never-before seen,” level. And the “downward trend throughout” needs to be replaced with “the labor share rose, then fell, over the postwar era.” It has made a round trip, rather than declining consistently from its starting level."