CBO sees medicare covering anti-obesity drugs raising federal spending by $35B

The Congressional Budget Office estimates the budgetary effects of an illustrative policy that would authorize Medicare to cover anti-obesity medications. The policy would apply to all beneficiaries with obesity and some beneficiaries who are classified as overweight. Medicare beneficiaries who are overweight or who have the medical condition of obesity are more likely to have worse health outcomes and higher health care expenditures than beneficiaries in the healthy weight category. Among adults enrolled in randomized controlled trials, treatment with certain anti-obesity medications (AOMs) has been shown to lead to significant weight loss and improved health when recipients use the drugs consistently and at the prescribed time intervals. Those drugs include glucagon-like peptide 1 (GLP-1) receptor agonists, which were originally approved to treat diabetes. The Medicare program covers some obesity-related services, including screening, behavioral counseling, and bariatric surgery (a procedure performed on the stomach or intestines to induce weight loss). It is prohibited by law from covering medications for weight management as part of the standard prescription drug benefit. Medicare covers GLP-1-based products only for beneficiaries who use them for medically accepted indications other than weight management. Currently, those accepted indications are diabetes and cardiovascular disease. Policymakers have introduced legislation to authorize Medicare to cover those medications more broadly. The CBO said that authorizing coverage of the medications would increase federal spending by about $35B from 2026 to 2034, adding that the average direct federal cost per AOM user would be roughly $5,600 in 2026, decreasing to $4,300 in 2034. Additinally, the CBO said that over 12.5M Medicare beneficiaries would newly quality for AOMs in 2026 under the illustrative policy, noting that 2% of the newly eligible population would use an AOM in 2026. Publicly traded companies with anti-obesity drugs include Novo Nordisk (NVO) and Eli Lilly (LLY).