Employers May Follow Medicare Coverage Of GLP-1 Weight Loss Drugs

News the Biden administration plans to require Medicare and Medicaid government health insurance to cover weight loss drugs could trigger private employers to do the same for their obese employees.

Currently, fewer than one in five large employers are covering such prescriptions despite the boom in popularity of expensive GLP-1 drugs to treat weight loss, according to a KFF analysis earlier this year.

But employee benefits analysts say employers could follow suit. And those who follow the Biden administration’s move to expand access to anti-obesity medications such as Ozempic and Wegovy, which are produced by the drugmaker Novo Nordisk, and Mounjaro and Zepbound, made by Eli Lilly, should be prepared to pay bigger health insurance premiums for their workers.

“Employers will consider that the Medicare program has expanded coverage,” said Tracy Spencer, pharmacy practice leader at Aon. “However, their drug cost coverage decisions for obesity and overweight along with associated indications for use such as cardiovascular risk reduction will be based on prevalence, cost, and equity concerns as they pertain to their population taking into account the entirety of increasing health care expenditures managed under their benefit programs and the associated waste in the system.”

To be sure, data Aon released earlier this year showed that weight loss prescriptions Wegovy, Rybelsus and Saxenda—along with Ozempic—are the “single biggest driver” of employer health costs, adding 1% to the total premium expense for 2025.

These GLP-1 drugs are adding to general healthcare inflation that is projected to increase employer-sponsored health insurance coverage by 9%, eclipsing $16,000 per employee in 2025. The spike in premiums, which is higher than the 6.4% increase employers faced this year and in 2023, comes before any “cost savings strategies” are implemented, Aon said in its report earlier this year.

Employees, too, can expect higher co-payments, deductibles and premiums deducted from their paychecks because employers shift about 20% of their total premium costs onto workers, though this can vary widely depending on employer.

Costs would also rise for states that administer Medicaid coverage for the poor and Medicare, the health insurance program for the elderly, as well as private Medicare Advantage plans and Medicare Part D drug coverage, analysts say.

But the Biden administration said such coverage is necessary to combat the nation’s obesity epidemic which is adding to healthcare costs already.

“Our loved ones with Medicare deserve care that puts their interests first. HHS is proposing to improve transparency, accountability, and consumer protections in Medicare Advantage and Part D plans so that everyone receives high-quality care,” said U.S. Health and Human Services Secretary Xavier Becerra said. “To achieve that, we want to remove barriers that delay care or deny people services and medications they need to be healthy. In addition, we continue to promote competition for pharmacies and other health care businesses.”

Meanwhile, the lack of access to such weight loss medications hailed for their effectiveness would improve health outcomes and save lives, the Biden administration said.

“In recognition of the prevailing medical consensus that obesity is a disease, (the Centers for Medicare & Medicaid Services) is proposing to reinterpret the statute to no longer exclude anti-obesity medications for the treatment of obesity from coverage under Medicare Part D and to require Medicaid programs to cover these medications when used to treat obesity,” CMS said in announcement its proposal. “This proposal would provide more Americans access to these transformative medications, improving the health and quality of life for millions of people who have obesity.”

The proposed new rule, which will require the incoming new Trump administration to approve, would not be effective until January 1, 2026, which will allow individual market Medicare plans to decide how to manage the change and reflect their costs in the bidding process, benefits analysts say.

“The Biden-Harris Administration has worked to ensure that the Medicare Advantage and Part D prescription drug programs work for people with Medicare, adopted policies holding plans accountable for providing high-quality health care, and protected the sustainability of the Medicare program,” said CMS Administrator Chiquita Brooks-LaSure. “This proposed rule continues to build on this work by expanding access to anti-obesity medications for people with Medicare and Medicaid, further addressing prior authorization concerns in Medicare Advantage, and promoting informed choice and transparency by requiring Medicare Advantage plans to share provider directory information on Medicare Plan Finder.”

The new rule, which was proposed by the administration Tuesday, would dramatically expand access to anti-obesity medications such as Ozempic and Wegovy, from Novo Nordisk, and Mounjaro and Zepbound, from Eli Lilly.