In a rare showing of bipartisan support, the state Senate in May overwhelmingly voted to pass a bill that would potentially help hundreds of thousands of California public employees combat obesity by requiring their health insurer to cover anti-obesity medications, or GLP-1 drugs, like Ozempic.
So why is CalPERS, the health plan for 1.3 million public employees and retirees, recommending its board oppose the bill?
In one word: Money.
In a new estimate, the California Public Employees’ Retirement System says the bill would increase premiums by $437.2 million, or about $28 per member, per month. It would cost the state general fund $187.2 million in the first year alone. In subsequent years, costs are likely to increase by “tens of millions of dollars annually.”
CalPERS staff, in its recommendation, says, “Broad coverage would strain health care resources due to the sheer scale of the eligible population. … Studies of total cost of care in the commercial market consistently show that GLP-1 coverage increases overall spending because added costs far exceed any savings from reduced healthcare utilization.”
The price tag may ultimately be tough to swallow for Gov. Gavin Newsom if the bill clears the Assembly and reaches his desk. Just last year Newsom persuaded the Legislature to end Medi-Cal coverage for weight-loss drugs because of their expense.
The new proposal by Sen. Laura Richardson would set up a five-year pilot requiring health insurers for public employees to cover treatment for chronic weight disease management, including at least one GLP-1 medication. GLP-1s can also help manage blood sugar levels for people with diabetes.
Being overweight increases health risks, including developing heart disease, high blood pressure and certain cancers. About 11 million California adults, or 27%, have obesity, according to the American Diabetes Association, a rate that is projected to increase to 41% in 2030.
In an April hearing, Richardson cited her own experience losing 43 pounds with the anti-obesity medication Zepbound. Because her doctor prescribed Zepbound for weight management and not diabetes, Richardson’s health insurance, CalPERS, did not cover it.
Richardson, an Inglewood Democrat, said, “Chronic weight management can be related to reduced labor participation earnings, increased early mortality, absenteeism, disability and health care costs in an excess of over $1 billion that impacts our California gross domestic product. … Why aren’t you offering something that could actually save you money in the end?”
CalPERS’ board plans to formally vote on its stance next week. The Assembly’s health committee is expected to consider the bill on June 16.