Coverage for weight loss drugs could cost Medicare $35 billion by 2034

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If Medicare were to cover anti-obesity medications (AOMs), federal spending would increase about $35 million between 2026 and 2034, finds a new Congressional Budget Office report.

Total direct federal costs of covering AOMs would increase from $1.6 billion in 2026 to $7.1 billion in 2034. Relative to the direct costs of the medications, total savings from beneficiaries' improved health would be small – less than $50 million in 2026 and rising to about $1 billion in 2034.

According to the report, weight loss is linked to reductions in health-related spending per user that are less than the estimated federal cost per user of covering AOMs throughout the 2026–2034 period. Per AOM user, the average direct federal cost would be roughly $5,600 in 2026, decreasing to $4,300 in 2034. And average offsetting federal savings would be about $50 in 2026, reaching $650 in 2034.

Obesity is a common chronic disease among Medicare beneficiaries, and it is associated with adverse health effects and higher costs to Medicare, which are paid by the federal government and by beneficiaries through premiums and cost sharing.

WHAT'S THE IMPACT

The estimates are based on what the CBO called an "illustrative policy," which would extend Medicare coverage to AOMs starting January 1, 2026, and authorize AOM coverage beneficiaries who are obese or simply classified as overweight.

More than 12.5 million Medicare beneficiaries would newly qualify for AOMs in 2026 under the illustrative policy; 0.3 million, or 2% of the newly eligible population, would use an AOM in 2026.

Despite growth in Medicare enrollment from 2026 to 2034, the CBO said the number of newly qualified beneficiaries would fall to 11.9 million in 2034 as those drugs were approved to treat additional conditions under current law. In that year, about 1.6 million (14%) of the newly eligible beneficiaries would use an AOM.

Beyond 2034, the policy's net federal costs to the Medicare program would probably be lower on a per-user basis than in the first decade, due to the cost of the drugs falling over time and because of the growth in savings linked to improved health.

The budgetary effects of authorizing AOM coverage in Medicare are highly uncertain, the CBO said. Estimates of costs and take-up rates are sensitive to the evolving evidence on the eligibility, use, price and clinical benefits associated with those medications. Those factors are also sensitive to the scope of the policy, including who in the Medicare population would become eligible for treatment with AOMs.

THE LARGER TREND

A recent Health Affairs study found that expanding Medicare coverage of anti-obesity medicines could increase annual spending by $3.1 to $6.1 billion.

The introduction of highly effective anti-obesity drugs, such as Wegovy, has prompted debate over Medicare Part D's current prohibition of such products, the report said.

Medicare Part D currently does not cover drugs used to treat weight loss unless it is prescribed for other reasons, such as reducing the risk of stroke or heart attack. The FDA recently approved Wegovy for this use, which could lead to Medicare Part D plans covering it for those purposes.

Without insurance, the price tag for medications such as Ozempic, Wegovy and Zepbound is over $1,000 per month, according to GoodRx Health.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.