New Proposal to Expand Medicare Coverage Raises Questions on Cost and Potential Savings
A recent report by the Congressional Budget Office (CBO) explores the potential budgetary impact if Medicare were to cover anti-obesity medications (AOMs) starting in 2026. While these medications, such as GLP-1 receptor agonists, have shown benefits for weight loss and health improvement, their coverage could lead to significant federal spending. Here’s a breakdown of the key findings:
Current Medicare Coverage and Policy Proposal:
Medicare Coverage Today: Medicare covers some obesity-related services, like behavioral counseling and bariatric surgery, but does not cover weight loss medications as part of its standard prescription drug benefit.
GLP-1 Medications: Currently, these drugs are covered only if used for diabetes or cardiovascular conditions, not for weight management.
Policy Proposal: New legislation could allow Medicare to cover AOMs for beneficiaries with obesity or certain overweight individuals starting in January 2026.
Estimated Federal Budgetary Impact:
Total Cost: Covering AOMs would increase federal spending by approximately $35 billion from 2026 to 2034. (2023 Total Part D Gross Spending: $281 billion)
Annual Spending Growth: Costs are expected to rise from $1.6 billion in 2026 to $7.1 billion in 2034.
Savings from Improved Health: Despite some health-related savings, they are relatively small compared to costs—less than $50 million in 2026 and rising to $1.0 billion in 2034.
Cost and Savings per User:
Average Cost: The direct federal cost per AOM user would start at about $5,600 in 2026, decreasing to $4,300 in 2034.
Health Savings: Expected savings from reduced health expenses are lower, starting at $50 per user in 2026 and increasing to $650 per user in 2034.
Eligibility and Expected Use:
Newly Eligible Beneficiaries: About 12.5 million Medicare beneficiaries would qualify for AOMs under the new policy in 2026.
Expected Use Rate: Only 2% (0.3 million) of those eligible are anticipated to use the medications in 2026, but this could grow to 14% (1.6 million) by 2034.
Future Trends: The number of eligible beneficiaries is expected to decline slightly to 11.9 million by 2034 as drug approvals expand to include other conditions.
Long-Term Outlook:
Cost Reduction Over Time: The CBO predicts that drug costs may fall and savings from improved health may grow, potentially lowering net federal costs per user after 2034.
Ongoing Uncertainty: Budget estimates are uncertain and highly sensitive to changes in drug prices, usage rates, and emerging evidence on the benefits of these medications.
PoundsPunch Comments:
The CBO’s analysis shows just how expensive it could be for Medicare to cover weight loss drugs like GLP-1s, even with potential health benefits. Adding $35 billion to federal spending by 2034 is no small sum, and it raises the question of whether the savings from improved health will ever truly offset those costs.
The fact that only a small percentage of eligible beneficiaries are expected to use these medications initially suggests that there may be barriers, like cost or accessibility, that keep people from taking advantage. Plus, with drug prices in flux, predicting long-term savings is a gamble. It’s clear that while this policy could help many struggling with obesity, the financial trade-offs are going to be a hot topic in the coming years.
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