Approximately 165 million Americans depend on employer-sponsored health insurance, yet many employees find their coverage insufficient, particularly regarding medications like Novo Nordisk’s weight-loss drug Wegovy and the diabetes medication Ozempic. A recent report by consulting firm Gallagher indicates that about one-third of employees seek additional resources to address obesity. Glucagon-like peptide-1 (GLP-1) treatments such as Wegovy and Ozempic, which mimic gut hormones to suppress appetite, are seen as revolutionary in this aspect.
These weight-loss drugs have gained substantial popularity in the United States, but they are not universally covered by insurance. This is despite the fact that Americans are experiencing higher rates of obesity, diabetes, and behavioral health issues than ever before, according to the “2024 Trends Shaping the Health Economy” report by Trilliant Health.
Cost remains a significant concern. Research suggests that obesity drugs offer notable health benefits beyond weight loss. However, U.S. insurers have expressed caution about covering these drugs due to their high costs, which can reach nearly $1,350 per month for a single patient. The high price of GLP-1 medications, combined with their potential benefit to a large number of employees, significantly contributes to increased healthcare expenses. Prescription drug costs rose by 8.6% last year, partly due to the increased use of GLP-1 drugs, according to a report by Mercer.
Mercer’s U.S. chief health actuary, Sunit Patel, and Gary Kushner, chair and president of Kushner & Company, emphasized the lifelong treatment requirement associated with these medications, highlighting their costly nature.
Currently, less than half of companies (42%) provide some level of coverage for expensive weight-loss drugs, with an additional 27% considering such coverage for the upcoming year, as noted by a Mercer survey. However, not all employees who wish to access these medications can do so. On the other hand, 3% of employers have recently withdrawn coverage for these drugs, and 10% are contemplating removing them by 2025.
To expand access to weight-loss drugs, businesses would need to incur greater expenses, which is challenging as healthcare costs are already projected to reach a post-pandemic high. According to consulting firm WTW, U.S. employers anticipate a 7.7% increase in healthcare costs by 2025, compared to 6.9% in 2024 and 6.5% in 2023. The Kaiser Family Foundation survey also indicates that integrating sought-after weight-loss drugs into benefit plans is among employers’ top concerns.
Some employers currently provide GLP-1 drug coverage exclusively for diabetes treatment, while others offer coverage for weight-loss purposes only if FDA-approved for that use. Ozempic, for instance, is approved only for treating Type 2 diabetes. This situation creates challenges for employees trying to access the drug through insurance coverage.
In a 2023 International Foundation of Employee Benefit Plans survey, 76% of companies provided GLP-1 drug coverage for diabetes, but only 27% for weight loss, leaving many employees without access. The demand for these medications is primarily for weight loss rather than diabetes, as noted by Gary Kushner.
Looking ahead to 2025, Beth Umland, Mercer’s research director of health and benefits, predicts that about half of large employers will cover the drugs for weight-loss purposes, though restrictions will likely guide who can access the treatment. Demand for these treatments is expected to rise, but utilization management controls help mitigate costs. These measures may include requirements for trying alternative weight-loss methods first or meeting certain Body Mass Index (BMI) criteria, as explained by Seth Friedman of Gallagher. Information on these requirements is typically available during open enrollment, which extends through early December.