The popularity of GLP-1s has skyrocketed in recent years, and a November 26 proposal from President Joe Biden’s administration to allow Medicare and Medicaid to cover the medications could make them even more prominent.
Medicare is currently barred by law from covering the drugs for weight loss and approves them only as treatments for diabetes or cardiovascular disease. To date, just 13 state Medicaid programs cover GLP-1s to treat obesity, while all states cover the drugs to treat diabetes.
Medicaid spending on GLP-1s hit $3.9 billion in 2023, and Medicare Part D spending on three GLP-1s hit $5.7 billion in 2022, per data from health policy research firm KFF. Allowing the payers to cover GLP-1s for weight loss would give approximately 7.4 million Medicare and Medicaid enrollees access at a lower cost, according to the Biden administration. Current out-of-pocket costs for the medications are around $1,000 per month.
But it could also be pretty expensive for the government. The Congressional Budget Office (CBO) estimates that Medicare coverage alone would increase net federal spending by roughly $36 billion by 2034. And the Centers for Medicare and Medicaid Services (CMS) says it would increase Medicaid spending by $15 billion over 10 years, according to KFF.
Manuel Jurado, principal at consulting firm the Dedham Group, told Healthcare Brew that coverage could lead to overall cost savings in the future, as GLP-1s have been shown to reduce the odds of developing chronic illnesses like diabetes and cardiovascular disease.
But the CBO estimates that the savings from improved health outcomes wouldn’t make up for the costs, projecting the drugs would save less than $50 million in 2026 and $1 billion in 2034.
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However, other experts, like researchers at the University of Southern California, think GLP-1s would have much greater cost savings, estimating they’d save up to $245 billion in the first 10 years if private insurers also covered the medications.
An uncertain future. The 60-day comment period for the proposal ends January 27, so it’s going to be up to the President-elect Donald Trump’s incoming administration to accept the proposal, and it’s unclear whether it’s likely to do so.
Trump’s choices of leaders for government healthcare agencies have expressed mixed views on GLP-1s, with Robert F. Kennedy Jr. (Trump’s pick to lead the US Department of Health and Human Services) and Marty Makary (nominated to lead the FDA) pushing the idea that the medications do not address the root causes of obesity. Mehmet Oz (Trump’s choice to lead CMS), however, has publicly praised the efficacy of the drugs in promoting weight loss.
Healthcare Brew reached out to Trump’s transition team and the incoming healthcare picks for comment but did not receive responses by publication.
“There is going to be growing pressure to cover obesity drugs, so this is not an issue that the incoming administration can easily just sidestep,” Larry Levitt, EVP for health policy at KFF, told Healthcare Brew. “Medicare coverage of drugs for obesity would be very popular among seniors. President Trump has said he won’t cut Medicare, and this would be an opportunity to expand it.”