An estimated 100 million adult Americans—more than 40 percent of the population—are classified as obese. This is a massive health crisis that will claim many lives over the next decades. As is well known, drugs now exist that can dramatically reduce obesity and its related health risks. But most of the roughly 37 million adult Americans on Medicaid—an estimated 14 million of whom suffer from obesity—do not have access to these drugs, known as GLP-1s. The reason is simple: These medications are hugely expensive, and the cost of covering them could seriously stretch state budgets in the short term. America should do it anyway.
GLP-1s are near-miracle drugs. On obesity alone they make a huge difference—resulting in about 15 to 20 percent weight loss in randomized trials. And although weight does not define health, and BMI is an overused number, the data are clear that obesity is a risk factor for a variety of diseases and is associated with higher mortality. Individuals experiencing obesity at age 40 have a life expectancy, on average, three to four years shorter than those who are in the normal weight range.
What’s more, these medications are also showing substantial benefits for both related and unrelated conditions. They have been used since 2005 to treat diabetes, and have more recently been approved to treat certain liver and kidney diseases as well. New evidence suggests that they may reduce alcohol consumption among those with a drinking problem. A summary paper comparing diabetics on a GLP-1 with those on other medications found that those taking a GLP-1 saw greater reductions in substance abuse, dementia risk, cardiovascular disease, and other conditions.
Some, especially within the MAHA movement, have criticized the widespread use of these medications, arguing that doctors and patients should focus more on diet and exercise as mechanisms for weight control. Whatever the benefits are of this individualized approach, it is impractical at the population level. We have mountains of evidence that lifestyle-based weight-loss interventions are not effective in the long term for the overwhelming majority of people.
GLP-1s are much more likely to succeed at scale. As of last year, an estimated 15 million adults were taking these medications. The millions of eligible adults on Medicaid, however, are mostly not covered, and this population generally cannot afford to pay out of pocket. Although state Medicaid programs are required to cover most FDA-approved medications, Congress has exempted weight-loss medications from this requirement because of cost concerns. As of August 2024, only 13 states covered these medications to treat obesity under Medicaid. The inequality in access itself creates further health inequalities, effectively denying individuals living in poverty a medical treatment that would improve their health and longevity. Ensuring coverage for these drugs by Medicaid in all states would make them more accessible and improve lives.
The primary objection to doing so is cost. There is substantial price variation, but the out-of-pocket cost for Wegovy, for example, is about $850 a month. At that price, if 10 percent of individuals with obesity who are covered by Medicaid took up these medications, it would cost about $1.2 billion a month, or $14.3 billion a year. Total Medicaid yearly spending is about $918 billion, so this would be a sizable increase. If every adult on Medicaid with obesity took up these medications, that would cost an estimated $143 billion a year. This is an enormous increase, and worries about it are why Congress has not required states to cover these drugs.
These budget concerns reflect the scope of the problem and the value of these medications in addressing it. If the medications were useless or the problem was small, then we wouldn’t worry so much about the cost. The fact that so many people will want these drugs, and so many doctors will be eager to prescribe them, is both an argument for making them available and a reason not to do so.
From an economic standpoint, I believe the budgetary concerns are overstated.
First: Some of the costs of these medications will be recouped in overall lower health-care spending. Estimates suggest that a one-point increase in BMI for individuals with obesity is associated with about a $250 increase in annual health-care expenditures. Treatment for obesity with GLP-1s reduces BMI by an estimated three points; that change in obesity would reduce the cost of coverage for these individuals by an estimated 11.5 percent. A broader calculation, published in the Journal of the American Medical Association, estimated that at current prices, 27 percent of the costs of these medications would be offset by other savings.
Second: The calculations assume that Medicaid would pay something similar to the current cost to private insurers. This is unrealistic. First, Medicaid generally pays far less for drugs than private insurance does; for a high-price drug, the Congressional Budget Office estimates that Medicaid pays 53 percent less after rebates. Second, opportunities for negotiation abound. There are multiple similar drugs in this class, and more are yet arriving. It may be possible for Medicaid to get a better deal.
Perhaps most important, the price of these drugs is expected to fall over time, as more competitors enter the market and as oral versions of these medications become available. We are already seeing this. Many calculations assume prices of $700 to $800 a month; Costco just announced that it will sell these medications for $499 a month.
With a baseline non-Medicaid cost of $499 a month and an expected 53 percent Medicaid discount, the expected cost will be about $235 a month. If 10 percent of the eligible Medicaid population took these drugs for obesity, that would mean an annual cost of $3.9 billion, which is just a 0.4 percent increase in Medicaid spending. This calculation also ignores the cost savings of lowering obesity, which, as noted above, may be in the range of $750 a person annually.
It is easy to get in the weeds with these admittedly back-of-the-envelope numbers, and with even moderately different assumptions, they could look quite different. Without an actual policy, we cannot be sure. But what is definitely true is that the costs here are far lower than the simplistic “these drugs are expensive” calculation would suggest. And the fact remains that they will literally save lives. Which, I would argue, is also worth something.
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