Medicaid Coverage for Weight-Loss Drugs

By Amina Niasse
NEW YORK (Reuters) – Most U.S. states do not cover popular weight-loss drugs from Novo Nordisk (NYSE:NVO) and Eli Lilly (NYSE:LLY) in their Medicaid programs for low-income individuals, largely due to cost concerns, according to a KFF survey.

As of July 2024, only 12 Medicaid programs included these obesity treatments, albeit with usage restrictions. Half of the states lacking coverage are contemplating adding these drugs or reassessing their policies.

GLP-1 agonists, initially formulated for type 2 diabetes, also aid in weight reduction by curbing appetite. Novo's Wegovy and Lilly's Zepbound cost approximately $1,000 monthly, but actual expenses may be lower due to health insurance assistance or discounts from drug manufacturers.

In addition to Medicaid, commercial health plans show limited coverage for these medications. The Medicare program for individuals aged 65 and above may cover GLP-1 drugs for diabetes and cardiovascular issues based on studies indicating heart benefits.

The survey indicated that Medicaid programs predict a 7% increase in health plan expenditures for fiscal 2025, down from a 19% rise this year, attributing this decline to a drop in membership. Most states’ fiscal years conclude on June 30.

The reduction in spending growth follows the cessation of a policy that mandated insurers to maintain member coverage during the COVID-19 pandemic, as well as the ending of certain federal funding.

Medicaid expenditures are financed through state budgets and the U.S. federal government. In fiscal 2024, overall Medicaid spending climbed 5.5% and is projected to grow by 3.9% in 2025.

Medicaid membership re-evaluations led to a decline from a peak of 94 million in April 2023, compared to about 71 million pre-pandemic. As of August, four states were still reviewing eligibility for Medicaid.

According to KFF, state Medicaid programs expect membership numbers to fall by approximately 4.4% in 2025, following a 7.5% drop in 2024.

An increase in provider costs, managed care, medical benefits, and prescription drugs were major factors influencing spending increases, the survey revealed.

Three-quarters of the states are currently considering at least one initiative to control prescription drug costs in 2024 or 2025, as reported by KFF.