Medicare has been banned from covering weight loss drugs since 2003. CMS launched the BALANCE voluntary model in December 2025 to work around the law—negotiating $50-per-month access to Ozempic, Wegovy, and similar blockbusters for 10% of Medicare enrollees starting July 2026. The workaround: don't call it weight loss coverage, call it treatment for chronic disease with specific comorbidities. Manufacturer applications closed January 8, 2026, with negotiations continuing through February 28.
The stakes are enormous, but the landscape just shifted dramatically. While CMS pursues federal expansion, California, Pennsylvania, and Michigan cut adult Medicaid GLP-1 weight loss coverage on January 1, 2026 due to budget pressures. Congressional Budget Office estimates put full Medicare coverage at $35 billion through 2034, but these state retreats signal the fiscal anxiety driving policy. Meanwhile, Novo Nordisk launched the first oral GLP-1 weight loss pill on January 5, 2026, potentially changing cost dynamics and compliance rates that underpin CBO projections. The model's success now depends on whether manufacturers accept $245 pricing to access 40 million beneficiaries, and whether state and federal programs can sustain costs that already forced three major Medicaid programs to reverse course.
Status: Scored Medicare obesity drug coverage at $35B over 10 years
Nonpartisan federal agency providing budget and economic analysis to Congress.
OB
Obesity Medicine Association
Medical Professional Organization
Status: Endorsed BALANCE model and advocates for barrier-free access
Professional organization representing physicians specializing in obesity medicine, advocating for evidence-based obesity treatment.
AL
Alliance of Community Health Plans
Insurance Industry Organization
Status: Cautiously supportive of BALANCE, seeking cost details
Trade association representing nonprofit, community-based health plans serving 25+ million Americans.
Timeline
BALANCE Demonstration Ends
Program Milestone
Initial demonstration period concludes; CMS evaluates results for permanent coverage decision.
Medicare BALANCE Full Launch
Implementation
Part D plans can offer GLP-1 coverage through BALANCE model nationwide.
Medicare Bridge Demo Begins
Implementation
Short-term demonstration gives Medicare Part D beneficiaries $50/month GLP-1 access before full BALANCE launch.
Medicaid BALANCE Launch
Implementation
State Medicaid programs can begin voluntary participation in GLP-1 coverage model.
Manufacturer Negotiation Deadline
Deadline
CMS must complete negotiations and execute Participation Agreements with manufacturers who submitted applications by January 8. Manufacturers accepting terms become official BALANCE participants.
Manufacturer Applications Due
Deadline
Eli Lilly and Novo Nordisk must submit BALANCE participation applications to CMS.
BALANCE Applications and Notices of Intent Due
Deadline
Manufacturer applications, state Medicaid agency notices of intent, and Part D plan notices of intent submitted to CMS. Participation agreements to be negotiated through February 28, 2026.
Novo Nordisk Launches Oral Wegovy Nationwide
Market Development
First oral GLP-1 weight loss pill becomes broadly available at US pharmacies including CVS and Costco. Starter dose priced at $149/month for self-pay patients. Pill demonstrated 16.6% mean weight loss in OASIS 4 trial, with one in three participants achieving 20%+ weight loss.
Three States Cut Medicaid GLP-1 Weight Loss Coverage
State Policy
California, Pennsylvania, and Michigan eliminate adult Medicaid coverage for GLP-1s prescribed solely for weight loss, citing budget constraints. California removes Wegovy, Zepbound, and Saxenda from formulary for weight loss; coverage continues for diabetes indications. Children under 21 retain coverage under federal EPSDT protections.
Obesity Medicine Association Endorses BALANCE Model
Professional Response
OMA releases position statement commending CMS and pharmaceutical partners for BALANCE model, calling it recognition of obesity as chronic disease requiring comprehensive medical treatment. Organization urges removal of preauthorization barriers and uniform prescribing access for physicians, NPs, and PAs.
CMS Launches BALANCE Model
Program Launch
Voluntary demonstration program announced enabling GLP-1 access for 10% of Medicare enrollees with specific comorbidities starting mid-2026.
FDA Approves First Oral GLP-1 for Weight Loss
Regulatory
FDA approves Novo Nordisk's Wegovy pill (once-daily oral semaglutide 25 mg), first oral GLP-1 receptor agonist for chronic weight management and cardiovascular risk reduction. Approval based on OASIS 4 trial showing 16.6% mean weight loss.
Trump Announces Manufacturer Deals
Negotiation
Administration negotiates $245 pricing with Eli Lilly and Novo Nordisk, with $50 beneficiary copays for limited Medicare access.
Trump Announces No Traditional Coverage
Policy
Administration declares Medicare and Medicaid will not cover anti-obesity drugs through standard benefit expansion.
CMS proposes reinterpreting statutory ban, classifying obesity drugs as chronic disease treatment to enable Medicare/Medicaid coverage for 7.4M Americans.
CBO Projects $35B Cost
Analysis
Congressional Budget Office estimates Medicare obesity drug coverage would cost $35 billion 2026-2034, with minimal health savings offsetting.
Zepbound Approved for Weight Management
Regulatory
FDA approves tirzepatide for obesity treatment; Eli Lilly captures market share from Novo Nordisk.
Inflation Reduction Act Enacted
Legislative
Biden signs law giving Medicare drug price negotiation power for first time, capping insulin at $35/month and out-of-pocket costs at $2,000.
FDA Approves Mounjaro
Regulatory
Eli Lilly's tirzepatide approved for diabetes; shows superior weight loss versus semaglutide.
Wegovy Approved for Weight Management
Regulatory
FDA approves higher-dose semaglutide specifically for chronic weight management, legitimizing GLP-1 obesity treatment.
FDA Approves Ozempic
Regulatory
Novo Nordisk's semaglutide approved for Type 2 diabetes; off-label weight loss use follows.
AMA Classifies Obesity as Disease
Medical
American Medical Association votes 60-40 to recognize obesity as chronic disease with "multiple pathophysiological aspects," contradicting its own committee recommendation.
Medicare Modernization Act Signed
Legislative
President Bush signs law creating Part D prescription drug benefit while explicitly banning coverage of weight loss drugs, treating obesity as cosmetic condition.
Scenarios
1
BALANCE Succeeds, Coverage Becomes Permanent Standard Benefit
Discussed by: Healthcare policy analysts at KFF, Georgetown Center on Health Insurance Reforms
If manufacturer participation is robust, beneficiary uptake reaches projections, and health outcomes demonstrate cost-effectiveness, Congress could pass legislation removing the 2003 statutory ban entirely. The demonstration's success would provide political cover for what CBO estimates as $35 billion in spending, reframed as chronic disease management rather than lifestyle intervention. This path mirrors hepatitis C coverage expansion in 2014, where initial spending spikes gave way to broader access. Requires sustained bipartisan support and manufacturers maintaining negotiated pricing as market competition increases.
2
Manufacturers Decline Participation, Model Collapses
Discussed by: Wall Street analysts covering Eli Lilly and Novo Nordisk, pharmaceutical industry trade groups
BALANCE is voluntary. If Eli Lilly and Novo Nordisk calculate that $245 pricing—75% below list price—cannibalizes more profitable commercial insurance and Part D diabetes coverage, they could refuse participation. Without manufacturer buy-in by the January 2026 deadline, the model dies. Both companies are already facing generic competition threats and pricing pressure from compounding pharmacies. Walking away preserves pricing power in commercial markets while accepting Medicare exclusion for obesity-only indications. Penn Wharton Budget Model warned that lack of price competition could more than double projected costs, giving manufacturers leverage.
3
Limited Success Creates Permanent Two-Tier Access
Discussed by: STAT News health policy reporters, American College of Gastroenterology
BALANCE launches but participation remains limited—some states join Medicaid component, others don't; some Part D plans participate, others stick to diabetes-only coverage. Eligible beneficiaries face geographic lottery and plan-switching complexity. The 10% eligibility threshold (high BMI plus specific comorbidities) becomes politically entrenched, creating permanent distinction between "deserving" obese patients with heart disease or diabetes versus those with obesity alone. This mirrors current state Medicaid patterns, where 16 states cover GLP-1s for obesity while others restrict access due to budget constraints. Demonstration continues through 2031 without resolution.
4
Costs Explode, Program Gets Terminated Early
Discussed by: Congressional Budget Office projections, deficit hawks in Congress
CBO's estimates assume just 14% uptake among eligible beneficiaries by 2034. If demand surges—driven by direct-to-consumer advertising and physician advocacy—spending could hit Penn Wharton's $140 billion projection instead of CBO's $35 billion. Early termination precedent exists: Trump administration halted Biden's proposed rule reinterpretation in April 2025. A Republican Congress facing budget pressure could kill BALANCE before the 2027 full Medicare launch, citing "unsustainable costs" and lack of long-term outcome data. The voluntary structure makes it easy to defund without overturning established benefit.
Historical Context
Hepatitis C Drug Coverage Expansion (2014)
2014-2015
What Happened
FDA approved Sovaldi, a $1,000-per-pill cure for hepatitis C. Medicare Part D spending on hepatitis C drugs exploded from $283 million in 2013 to $4.5 billion in 2014—a 16x increase overnight. Despite sticker shock, CMS expanded coverage because drugs actually cured a deadly communicable disease. State Medicaid programs faced budget crises but eventually provided access.
Outcome
Short Term
Initial budget panic and state rationing of treatments to sickest patients first.
Long Term
Universal Part D plan coverage by 2015; hepatitis C drugs became standard benefit despite costs.
Why It's Relevant Today
Shows Medicare can absorb massive drug spending increases when clinical benefit is clear—but hepatitis C cured patients, while GLP-1s require indefinite use.
Medicare Part D Creation (2003-2006)
2003-2006
What Happened
Medicare Modernization Act of 2003 created the Part D prescription drug benefit, Medicare's largest expansion since its 1965 founding. The law explicitly excluded coverage for weight loss, weight gain, cosmetic purposes, and fertility—reflecting 2003 attitudes that obesity was a lifestyle choice, not a disease. The exclusion was borrowed from Medicaid statute and embedded in Medicare's foundational prescription drug architecture.
Outcome
Short Term
Part D launched January 2006 with weight loss ban intact; no controversy at the time.
Long Term
Ban remained unquestioned for 18 years until GLP-1 efficacy and AMA disease classification created pressure.
Why It's Relevant Today
The statutory exclusion wasn't ideological—it reflected medical consensus circa 2003. Changing it requires either legislation or creative reinterpretation like BALANCE.
AIDS Drug Assistance Program (1987-1990)
1987-1990
What Happened
As HIV/AIDS epidemic overwhelmed patients with antiretroviral costs exceeding $10,000 annually, advocacy groups pushed federal government to create AIDS Drug Assistance Program (ADAP) in 1987, formalized in 1990 Ryan White CARE Act. Program provided federal funding specifically for HIV medications outside traditional insurance structures. Medicaid became largest payer for HIV treatment, covering 40%+ of people with HIV.
Outcome
Short Term
ADAP enabled access to lifesaving antiretrovirals for uninsured and underinsured patients.
Long Term
Created precedent for disease-specific federal drug assistance programs; HIV drugs eventually gained broad insurance coverage.
Why It's Relevant Today
Disease-specific programs can bypass traditional coverage restrictions when public health stakes are high—but BALANCE faces questions about whether obesity justifies similar treatment.
