States Reconsider Coverage of Weight-Loss Drugs

What a difference a year makes.

In March of last year, we reported that many states were considering requiring insurers to cover popular weight-loss drugs like Ozempic, Wegovy, Mounjaro and Victoza.

But not anymore.

California and New Hampshire stopped covering glucagon-like peptide-1 (GLP-1) prescriptions for obesity treatment under Medicaid at the start of this year.

Michigan, Pennsylvania, Rhode Island, South Carolina and Wisconsin are also either planning or looking into similar restrictions, according to the Kaiser Family Foundation’s November survey of state Medicaid programs.

The shift has been sudden. As of October, 16 states were covering the medications for obesity, up from 13 the previous year. The KFF survey also found that few states were planning to expand GLP-1 coverage, “in sharp contrast to last year’s survey,” which found that half of the states that weren’t already covering obesity drugs were considering doing so.

Trend Change Driven by Fiscal Concerns

Rising drug costs appear to be the main driver of the trend change on GLP-1s, with nearly two-thirds of states that responded to the KFF survey reporting that “cost was a key factor contributing to their obesity drug coverage decision.” California, which is facing an $18 billion budget deficit, projected its costs for covering GLP-1 drugs for obesity would quadruple to $790 million per year by the 2028-29 fiscal year if it didn’t stop covering the drugs for that use under Medi-Cal.

KFF also noted that federal Medicaid spending cuts in the 2025 federal budget reconciliation bill (HR 1) could “further exacerbate” states’ existing cost concerns.

KFF’s recent annual survey of employer health benefits found that the high cost of the drugs has some employers considering restricting coverage of them in the future as well.

GLP-1 Coverage Bills Introduced in Handful of States

So far this year, bills dealing with insurance coverage of glucagon-like peptide-1, or GLP-1, drugs have been introduced in four states, according to the LexisNexis® State Net® legislative tracking system. Two of the measures provide for the removal of such coverage.

Fewer States Considering GLP-1 Bills

State legislative activity on GLP-1s also suggests the Ozempic boom may be losing steam. When we looked into this issue last year, at least 13 states had introduced legislation dealing with coverage of GLP-1s by individual and group insurance plans or Medicaid. Most of the bills mandated coverage of the drugs for weight loss.

So far this year, bills dealing with insurance coverage of the drugs have only been introduced in four states. And measures in two of those states would restrict such coverage. The bills are:

• Florida HB 977 and SB 1070, which would require state group health plan coverage of GLP-1 drugs for obesity;

• New Hampshire SB 455, which would require health benefit plans to cover GLP-1 medications for enrollees with a body mass index, BMI, of 40 or higher and enrollees with a body max index, or BMI, of 35 or higher who have co-morbidities, including type 2 diabetes or hypertension;

• Rhode Island HB 7127, which would authorize the secretary of the state’s Executive Office of Health and Human Services to end coverage for GLP-1 drugs, unless prescribed for the treatment of type 2 diabetes; and

• Virginia HB 29, SB 29 and SB 30 would prohibit the Department of Medical Assistance Services from covering GLP-1 drugs “for any indication if the net price per unit exceeds $245, through the best agreement available to the state.”

In addition to the measures dealing with insurance coverage of GLP-1 drugs, a bill introduced in Indiana (SB 282) would restrict the compounding of GLP-1 medications, and a pair of bills in Mississippi (HB 1136 and SB 2554) would authorize doctors who practice obesity medicine to prescribe GLP-1 drugs.

Pushback from State Workers

In Colorado, where spending on GLP-1s increased more than four-fold from 2023 to 2024, the state health plan is also considering restricting coverage. But that idea is drawing pushback from state workers.

“[State employees] are very upset about this,” Hilary Glasgow, executive director of the state employees’ union, Colorado WINS, told Politico. “Long-term obesity drives a lot of the major fatal diseases in America, and the employees I’ve talked to feel like they’re losing a lifeline that got thrown to them.”

Trump Trying to Lower Cost of Weight Loss Drugs

Meanwhile, at the federal level, the Trump administration has announced agreements with Eli Lilly and Novo Nordisk to lower the cost of their obesity drugs for Medicare and Medicaid, as well as for consumers who purchase the drugs directly through a new program called TrumpRx. Referencing this development, KFF pointed out that “lower costs for state Medicaid programs could result in more states expanding coverage of obesity drugs.”

TrumpRx hasn’t launched yet, however. And it’s unclear how the program will affect other health plans. Some have speculated that the price cuts—which are only for Medicare, Medicaid and direct-to-consumer coverage—will trickle down to group health plans.

But others say drugmakers will attempt to make up losses incurred under this deal with higher prices for those insured under employer plans.

Americans Already Facing Higher Premiums

Coverage of GLP-1s is changing alongside the expiration of tax credits that have helped lower the cost of health insurance for enrollees in the Affordable Care Act program.

ACA insurers in some states were projecting premium increases averaging up to 26 percent, meaning this change for GLP-1s might not qualify as even the 10th most significant health insurance shift of 2026.

Still, with the outsized attention the drugs have been drawing, employers would be wise to watch how the states respond.

—By SNCJ Correspondent BRIAN JOSEPH

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