States across the country are facing budget challenges that are impacting healthcare coverage, particularly for weight loss treatments. California recently passed a budget for 2025-2026 that eliminates Medicaid coverage for GLP-1 agonists for weight loss, and other states are considering similar cuts. The enactment of The Big Beautiful Bill is adding further pressure on state budget finances, making it unlikely that Medicaid coverage for weight loss treatments will expand in the near future.
The obesity epidemic in the United States is a major concern, with nearly 40% of adult Americans considered obese. Rates of obesity have been steadily rising since 1980, leading to an increased risk of developing conditions such as diabetes, heart disease, osteoarthritis, and various cancers. Medications known as glucagon-like peptide-1 agonists, or GLP-1s, have become popular as weight loss agents. When taken as directed, along with a proper diet and exercise regimen, GLP-1s have been effective in helping individuals lower their weight.
However, coverage for these medications remains a challenge, with commercial insurance coverage improving but still not universal. In Medicare, coverage of GLP-1s for weight loss alone is prohibited, although obese patients can access the semaglutide-based product, Wegovy, for heart disease. Medicaid generally does not reimburse GLP-1s for obesity, with only 14 states covering obesity medications in their state Medicaid plans.
With significant Medicaid cuts resulting from the passage of The Big Beautiful Bill, more states are likely to follow suit in cutting coverage for obesity medications. The new legislation limits how states can fund their share of Medicaid costs, leading to potential cuts in a wide range of Medicaid benefits. States that do opt to cover weight loss treatments often impose restrictive eligibility requirements and utilization management tools to control costs.
While there is a possibility that some state Medicaid agencies may elect to cover weight loss drugs for “weight management” through a voluntary demonstration project, details and incentives for participation remain unclear. The high cost of these therapeutics is a primary concern for payers, with potential budget impacts for commercial insurers and public sector payers like Medicaid.
In addition to cost considerations, lack of persistence on GLP-1s is another factor contributing to hesitance in reimbursing weight loss drugs. Patients often discontinue treatment at a high rate, leading to little or no benefit and added costs for payers. As net prices of GLP-1s decrease and more data shows the benefits of consistent use in conjunction with diet and exercise, there may be a reconsideration of coverage decisions in the future. Until then, coverage for weight loss treatments will continue to be a significant challenge for payers.
