Private Insurers and Incentive Alignment in US Healthcare

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Private insurers in the US healthcare system have a strong incentive to cover only those medical expenses that pay off in less than the average job tenure of 3.7 years, or those with overwhelming employee demand. This results in a mismatch of time horizons, as individuals are invested in their long-term health outcomes while insurance carriers are not. As a result, insurers tend to offload the costs of chronic conditions onto government programs like Medicare, contributing to a significant incentive problem in the healthcare system.

Last year Novo Nordisk, the Danish pharmaceutical company behind Ozempic and Wegovy, overtook LVMH to become Europe’s most valuable company. And the pull for Acquired to finally tackle healthcare (18% of US GDP!) became too strong for us to resist. While we didn’t know much about Novo Nordisk before diving in, our first thought was, “wow, seems like these new diabetes and obesity drugs mean serious trouble for big insulin companies.”

And then… we realized that Novo Nordisk IS the big insulin company. And in a story befitting of Steve Jobs and Apple, they’d just disrupted themselves with the drug equivalent of an iPhone moment. Once we dug further, we quickly realized this company has it all: an incredible 100+ year history filled with Nobel Prizes, bitter personal rivalries, board room dramas, a generation-defining silicon valley innovation, lone voices persevering against all odds — and oh yeah, the world’s largest charitable foundation at its helm. Tune in for one incredible story!

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‍Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.