How Would Authorizing Medicare to Cover Anti-Obesity Medications Affect the Federal Budget

CBO 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.

In this report, the Congressional Budget Office estimates the budgetary effects of an illustrative policy that would authorize Medicare to cover AOMs starting in January 2026. The policy would apply to all beneficiaries with obesity, as well as certain beneficiaries who are classified as overweight. Adoption of such a policy would have these effects, in CBO's estimation:

• Federal Budgetary Cost. Authorizing coverage of AOMs in Medicare would increase federal spending, on net, by about $35 billion from 2026 to 2034. Total direct federal costs of covering AOMs would increase from $1.6 billion in 2026 to $7.1 billion in 2034. Relative to the direct costs of the medications, total savings from beneficiaries' improved health would be small-less than $50 million in 2026 and rising to $1.0 billion in 2034.
• Cost and Savings per User. Weight loss is associated with reductions in health-related spending per user that are less than the estimated federal cost per user of covering AOMs throughout the 2026-2034 period. Per AOM user, the average direct federal cost would be roughly $5,600 in 2026, decreasing to $4,300 in 2034. And average offsetting federal savings would be about $50 in 2026, reaching $650 in 2034.
• Eligibility and Take-up. Over 12.5 million Medicare beneficiaries would newly qualify for AOMs in 2026 under the illustrative policy; 0.3 million, or 2 percent of the newly eligible population, would use an AOM in 2026. Despite growth in Medicare enrollment from 2026 to 2034, the number of newly qualified beneficiaries would fall to 11.9 million in 2034 as those drugs were approved to treat additional conditions under current law. In that year, about 1.6 million (or 14 percent) of the newly eligible beneficiaries would use an AOM.

Beyond 2034, the policy's net federal costs to the Medicare program would probably be lower on a per-user basis than in the first decade for two reasons. CBO expects that the cost of the drugs will fall over time and that the savings from improved health will grow over time. Nevertheless, the policy would still increase federal spending between 2026 and 2044.

The budgetary effects of authorizing AOM coverage in Medicare are highly uncertain. Estimates of costs and take-up rates are sensitive to the rapidly evolving evidence on the eligibility, use, price, and clinical benefits associated with those medications. Those factors are also sensitive to the scope of the policy, including who in the Medicare population would become eligible for treatment with AOMs.

• Data Underlying Figures and Tables

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• Estimating the Effects of Federal Policies Targeting Obesity: Challenges and Research Needs
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