Overview
Medicare has been banned from covering weight loss drugs since 2003. Now CMS is launching a voluntary model that works around the law—negotiating $50-per-month access to Ozempic, Wegovy, and similar blockbusters for 10% of Medicare enrollees starting mid-2026. The workaround: don't call it weight loss coverage, call it treatment for chronic disease with specific comorbidities.
The stakes are enormous. Congressional Budget Office estimates put full Medicare coverage at $35 billion through 2034. But obesity affects 40 million Medicare beneficiaries, GLP-1 drugs can cost $1,000+ monthly without insurance, and manufacturers Eli Lilly and Novo Nordisk sold over $40 billion of these drugs in 2024 alone. This isn't just about expanding access—it's about whether the federal government can afford to cover the most expensive drug class in modern pharmaceutical history.
Key Indicators
People Involved
Organizations Involved
Federal agency managing $1 trillion annually covering Medicare, Medicaid, CHIP, and ACA marketplaces for 145 million Americans.
Manufacturer of tirzepatide-based GLP-1s Mounjaro and Zepbound, which generated $24.8 billion in 2024.
Manufacturer of semaglutide-based GLP-1s Ozempic and Wegovy, which generated over $11 billion in H1 2024.
Influential physician organization whose 2013 obesity classification enabled policy shift.
Nonpartisan federal agency providing budget and economic analysis to Congress.
Professional organization representing physicians specializing in obesity medicine, advocating for evidence-based obesity treatment.
Trade association representing nonprofit, community-based health plans serving 25+ million Americans.
Timeline
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Obesity Medicine Association Endorses BALANCE Model
Professional ResponseOMA 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.
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BALANCE Demonstration Ends
Program MilestoneInitial demonstration period concludes; CMS evaluates results for permanent coverage decision.
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Medicare BALANCE Full Launch
ImplementationPart D plans can offer GLP-1 coverage through BALANCE model nationwide.
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Medicare Bridge Demo Begins
ImplementationShort-term demonstration gives Medicare Part D beneficiaries $50/month GLP-1 access before full BALANCE launch.
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Medicaid BALANCE Launch
ImplementationState Medicaid programs can begin voluntary participation in GLP-1 coverage model.
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Manufacturer Applications Due
DeadlineEli Lilly and Novo Nordisk must submit BALANCE participation applications to CMS.
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CMS Launches BALANCE Model
Program LaunchVoluntary demonstration program announced enabling GLP-1 access for 10% of Medicare enrollees with specific comorbidities starting mid-2026.
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Trump Announces Manufacturer Deals
NegotiationAdministration negotiates $245 pricing with Eli Lilly and Novo Nordisk, with $50 beneficiary copays for limited Medicare access.
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Trump Announces No Traditional Coverage
PolicyAdministration declares Medicare and Medicaid will not cover anti-obesity drugs through standard benefit expansion.
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Trump Administration Begins
PoliticalAdministration transition halts Biden's proposed rule reinterpretation approach.
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Biden Proposes Coverage Rule
RegulatoryCMS proposes reinterpreting statutory ban, classifying obesity drugs as chronic disease treatment to enable Medicare/Medicaid coverage for 7.4M Americans.
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CBO Projects $35B Cost
AnalysisCongressional Budget Office estimates Medicare obesity drug coverage would cost $35 billion 2026-2034, with minimal health savings offsetting.
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Zepbound Approved for Weight Management
RegulatoryFDA approves tirzepatide for obesity treatment; Eli Lilly captures market share from Novo Nordisk.
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Inflation Reduction Act Enacted
LegislativeBiden signs law giving Medicare drug price negotiation power for first time, capping insulin at $35/month and out-of-pocket costs at $2,000.
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FDA Approves Mounjaro
RegulatoryEli Lilly's tirzepatide approved for diabetes; shows superior weight loss versus semaglutide.
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Wegovy Approved for Weight Management
RegulatoryFDA approves higher-dose semaglutide specifically for chronic weight management, legitimizing GLP-1 obesity treatment.
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FDA Approves Ozempic
RegulatoryNovo Nordisk's semaglutide approved for Type 2 diabetes; off-label weight loss use follows.
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AMA Classifies Obesity as Disease
MedicalAmerican Medical Association votes 60-40 to recognize obesity as chronic disease with "multiple pathophysiological aspects," contradicting its own committee recommendation.
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Medicare Modernization Act Signed
LegislativePresident Bush signs law creating Part D prescription drug benefit while explicitly banning coverage of weight loss drugs, treating obesity as cosmetic condition.
Scenarios
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.
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.
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.
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)
2014-2015What 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
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)
2003-2006What 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
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)
1987-1990What 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
Disease-specific programs can bypass traditional coverage restrictions when public health stakes are high—but BALANCE faces questions about whether obesity justifies similar treatment.