The Biden administration’s recent proposal to require Medicare and Medicaid to cover weight loss medications has sparked discussions about potential implications for private employers and their health insurance coverage for obese employees.

According to a KFF analysis, currently, fewer than one in five large employers cover weight loss prescriptions, despite the increasing popularity of expensive GLP-1 drugs like Ozempic and Wegovy. However, employee benefits analysts believe that employers may follow suit in light of the Biden administration’s move to expand access to anti-obesity medications.

Tracy Spencer, a pharmacy practice leader at Aon, noted that employers will need to consider the impact of expanding coverage for weight loss medications on their health insurance premiums. Data released by Aon indicated that weight loss prescriptions like Wegovy, Rybelsus, Saxenda, and Ozempic are significant cost drivers for employers, contributing to a 1% increase in total premium expenses by 2025.

The rise in healthcare costs associated with covering weight loss medications is expected to lead to an increase in employer-sponsored health insurance premiums, surpassing $16,000 per employee by 2025. This increase comes before any cost-saving strategies are implemented, potentially resulting in higher co-payments, deductibles, and premiums for employees.

States that administer Medicaid and Medicare programs, as well as private Medicare Advantage plans and Medicare Part D drug coverage, are also likely to experience increased costs due to the proposed coverage expansion for weight loss medications.

The Biden administration has emphasized the importance of combatting the nation’s obesity epidemic by expanding access to effective weight loss medications. Health and Human Services Secretary Xavier Becerra highlighted the need to remove barriers that delay care or deny individuals access to necessary services and medications.

The Centers for Medicare & Medicaid Services (CMS) proposed rule aims to reinterpret existing statutes to include anti-obesity medications for the treatment of obesity under Medicare Part D and require Medicaid programs to cover these medications. This change is expected to improve health outcomes and quality of life for individuals struggling with obesity.

CMS Administrator Chiquita Brooks-LaSure underscored the administration’s commitment to expanding access to anti-obesity medications for individuals with Medicare and Medicaid. The proposed rule also focuses on addressing prior authorization concerns in Medicare Advantage plans and promoting informed choice and transparency for beneficiaries.

Overall, the Biden administration’s efforts to expand coverage for weight loss medications reflect a broader commitment to improving healthcare access and outcomes for individuals with obesity. The proposed changes are expected to have far-reaching implications for employers, insurers, and individuals covered by government health insurance programs.