Cuban's Challenge to ETF Investors: Divest from Big Health Insurers
Mark Cuban is calling on investors to divest from major health insurers, arguing that they prioritize share prices over patient care. The billionaire entrepreneur claims that these companies contribute to rising healthcare costs by underpaying and delaying providers.
Cuban's proposal may be difficult for passive investors who hold broad-market ETFs such as the Vanguard Total Stock Market ETF (VTI). These funds often track indexes rather than selectively exclude companies, which means they may own major insurers like UnitedHealth Group Inc (UNH), CVS Health Corp (CVS), and Cigna Group (CI).
As of June 30, VTI held 3,531 stocks and allocated 9.1% of its portfolio to healthcare. This means that investors who hold VTI may unintentionally be supporting companies whose practices they dislike.
Cuban's comments highlight the dilemma faced by ETF investors: owning a broad-market fund provides diversification but also means owning businesses across industries, including those with questionable practices.