State Budgets and Weight-Loss Drugs
Colorado’s spending on highly effective but costly weight-loss drugs for state workers more than quadrupled from 2023 to 2024 — and costs have been doubling every six months.
Now, the state wants to scrap the benefit, arguing that it’s financially unsustainable.
The potential removal of the popular benefit has sparked blowback among state workers. The state employees’ union argues ending coverage will cost the health plan in other ways — increasing spending on obesity-related diseases and leading to a less healthy workforce.
The Colorado case underscores the broader struggle of states — many of which are facing budget shortfalls this year — that cover weight-loss drugs like Ozempic and Wegovy for state workers.
Challenges Faced by States
Over the past three years, a growing number of states have taken leaps of faith in covering the expensive class of drugs, hoping that the benefit would lead to healthier workforces that would be less expensive to insure.
But with the number of prescriptions skyrocketing past projections, some states are limiting or ending the benefit.
Financial Implications and Tough Decisions
At least two others — North Carolina and West Virginia — have already eliminated coverage due to cost concerns. That means state employees seeking the drugs for weight loss in those states will have to pay up to $1,500 a month for the treatments.
The issue is forcing states into difficult deliberations: Keep covering the drugs and risk depleting their budgets — and potentially increase premiums for everyone on their plans — or eliminate a benefit that many employees now rely on.
The dilemma also comes as states face their toughest budgetary pressures in years, in large part because federal cash they received during the pandemic has disappeared.
President Trump’s Take on Drug Prices
In a Fox News interview that aired Sunday, President Donald Trump criticized the high price of the drugs.
And if Trump follows through on his threat to impose tariffs on Denmark, the move could further drive up the costs of Ozempic and Wegovy, which are manufactured by Danish drugmaker Novo Nordisk — and create even greater fiscal challenges for state policymakers.
Strategies and Consequences
Because states can choose whether to cover GLP-1 drugs for weight loss, there is a patchwork of coverage for state employees across the country.
The potential market for the drugs is massive — more than 40 percent of adults in the U.S. are obese — and has seen explosive growth.
State Approaches and Outcomes
Connecticut’s state employee health plan last year took an experimental approach to coverage — requiring employees to enroll in a lifestyle management program called Flyte before receiving the medications.
The program showed early success in reducing the number of GLP-1 prescriptions, cutting the cost trend in half.
And clinically, the program has been a success: Enrollees have had a 16 percent drop in weight and BMI and a 14 percent drop in blood pressure.
But 19 months in, more and more state employees are enrolling in the program.
Conclusion
State budgets are grappling with the rising costs of weight-loss drugs and the implications for state workers’ health and financial sustainability.
