California lawmakers are weighing whether public employee health plans should cover popular anti-obesity medications such as Ozempic, a proposal that has drawn broad support in the state Senate but sharp concern from CalPERS over its projected cost.
The bill, carried by Sen. Laura Richardson, an Inglewood Democrat, would create a five-year pilot program requiring health insurers serving public employees to cover treatment for chronic weight management. That coverage would have to include at least one GLP-1 medication, a class of drugs that includes Ozempic and similar treatments. The medications are commonly known for weight loss but also are used to help regulate blood sugar for people with diabetes.
The measure passed the state Senate in May with strong bipartisan backing, reflecting growing interest in expanding access to obesity treatments. But the California Public Employees’ Retirement System, which provides health coverage to about 1.3 million public employees and retirees, is recommending that its board oppose the legislation.
The reason, according to CalPERS, is the potential financial impact.
In a new estimate, CalPERS said the bill would raise premiums by $437.2 million, equal to about $28 per member per month. The system projected the cost to the state general fund would be $187.2 million in the first year, with expenses likely to rise by tens of millions of dollars annually in later years.
CalPERS staff warned that opening broad access to GLP-1 drugs would place major pressure on the health care system because of the large number of people who could qualify. Staff also cited studies from the commercial insurance market indicating that GLP-1 coverage tends to increase overall spending, with drug costs outweighing savings from reduced medical care.
The cost concern could become a major obstacle if the bill reaches Gov. Gavin Newsom. Last year, Newsom persuaded lawmakers to end Medi-Cal coverage for weight-loss drugs, citing the expense to the state.
Supporters of Richardson’s proposal argue that obesity is a serious chronic condition that should be treated like other major health risks. Being overweight or obese is associated with higher rates of heart disease, high blood pressure and some cancers. The American Diabetes Association estimates that about 11 million California adults, or 27%, have obesity. The organization projects that figure could rise to 41% by 2030.
Richardson has pointed to her own experience using Zepbound, another anti-obesity medication. During an April hearing, she said she lost 43 pounds on the drug but had to pay for it without coverage from CalPERS because it was prescribed for weight management rather than diabetes.
She argued that chronic weight issues affect the state’s economy through higher health costs, disability, absenteeism, early death and reduced workforce participation. Richardson questioned why insurers would not cover a treatment that she believes could ultimately reduce costs.
The debate reflects a broader challenge facing California and other states as demand grows for GLP-1 medications. The drugs have been hailed by many patients and doctors as a breakthrough in treating obesity, but their high price has raised difficult questions for public programs and employer-sponsored health plans.
For public employees across California, including workers and retirees in the Inland Empire, the outcome could determine whether weight-loss medications become more widely available through government health plans or remain limited largely to those who can qualify under existing rules or afford to pay out of pocket.
The CalPERS board is expected to vote on its position next week. The bill is scheduled to be heard by the Assembly health committee on June 16.
Original source: CalMatters
