- Michigan’s new bipartisan budget restricts Medicaid coverage of GLP-1 weight loss drugs to morbidly obese individuals, cutting pharmaceutical appropriations by $240 million
- Health care experts see the move as a ‘cost containment’ measure as GLP-1 use among Michigan Medicaid beneficiaries rose to over 90,000 patients last year
- Drugs like Ozempic will continue to be covered for diabetes as the new Medicaid restrictions come online Jan. 1
Michigan’s new bipartisan state budget will limit Medicaid coverage of a group of weight loss drugs whose use has exploded in popularity in recent years.
GLP-1 receptor agonists like Wegovy, Saxenda and Zepbound will be restricted in Michigan “exclusively to individuals classified as morbidly obese” under the new budget, with coverage contingent on the failure of other weight loss interventions to prevent higher-cost bariatric surgery.
The state’s Medicaid program covers GLP-1 drugs like Ozempic, Rybelsus, Victoza and Mounjaro for Type 2 diabetes, per federal guidelines. Michigan approved additional coverage in 2022 for those seeking GLP-1s exclusively for obesity.
The new state budget directs the Michigan Department of Health and Human Services “to implement stricter criteria for GLP‑1 medications prescribed solely for weight loss,” DHHS spokesperson Lynn Sutfin said in an email to Bridge Michigan.
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“We are evaluating potential policy changes with the goal of implementing them effective Jan. 1, 2026. Medicaid beneficiaries who may be affected will receive advance notice before any changes take effect.”
Under the $81 billion state budget, which reduced funding for the Michigan Department of Health and Human Service by 20%, pharmaceutical appropriations for GLP-1 drugs were reduced by $240 million, according to the nonpartisan House Fiscal Agency.
A ‘clinical breakthrough’
GLP-1 use has surged in recent years, with one recent poll estimating 1 in 8 adults nationwide have used the drugs to fight weight loss, treat diabetes or prevent heart attacks and strokes.
Dr. Mark Fendrick, who directs the Center for Value-Based Insurance Design at the University of Michigan and has written extensively about GLP-1s, describes the drugs as “remarkable.
“It’s this amazing clinical breakthrough, particularly for patient populations that I worry about, who are most impacted by obesity-related conditions like diabetes and obesity-related cancers and heart disease,” Fendrick told Bridge Michigan. “These are folks that tend to be left behind.”
Use among Michigan Medicaid beneficiaries has skyrocketed, quadrupling from 20,935 patients in the 2021 fiscal year to 90,324 in 2024.
About 60% of Michigan Medicaid GLP-1 claims are requested for diabetes treatment, according to the state health department, while the remaining claims were for weight loss. An estimated 80% of Michigan Medicaid recipients receiving the anti-obesity products have other conditions that qualify them for coverage, the department said.
“Medicaid coverage for beneficiaries with diabetes, cardiovascular disease and sleep apnea will continue,” Sutfin said.
Dr. Syed Ahsan, a vascular medicine specialist at Henry Ford Health, said that, while GLP-1s have been shown to work well in dropping weight and weight-related illnesses, “prevention is the best cure.
“We still don’t know the full effects of these medications,” Ahsan said, preferring to recommend dietary and other lifestyle changes to his patients before prescribing GLP-1 drugs.”
Ballooning costs
Michigan Medicaid paid more than $409 million in the 2024 fiscal year on GLP-1s before any discounts or price concessions. DHHS said manufacturer rebates typically offset GLP-1 pharmaceutical expenditures in the state’s Medicaid program by 80%.
Those representing Michigan’s health insurance companies support the new restrictions.
“The policy changes around the anti-obesity drug class for the Medicaid program, I think, will be positive policy changes, so that we can focus spending on anti-obesity on those that are likely to see the greatest improvement in health outcomes,” said Dominick Pallone, executive director of the Michigan Association of Health Plans.
Before the legislation, some commercial plans stopped covering the weight loss drugs all together. Blue Cross Blue Shield of Michigan ended its coverage for Wegovy, Saxenda and Zepound to treat weight loss for many of its plans this year, requiring new prior authorization for the drugs for some obese adult patients.
“From 2022 to 2023, the costs for GLP-1 drugs paid on behalf of our members grew by more than $350 million,” Blue Cross said in a blog post following the announcement. The insurer has continued coverage for Ozempic, Mounjaro, Rybelsus and Victoza as prescribed to treat Type 2 diabetes.
The drugs, which can cost $500 out-of-pocket for a one-month supply, have received much attention for their price. President Donald Trump made a comment last week that Ozempic costs would be “much lower” following ongoing pharmaceutical negotiations.
For Fendrick, who studies the impacts on patients and provider care, the state’s forthcoming policy to limit access to GLP-1s appears to be a “cost containment” measure that will “slow the flow of dollars through the pipeline.”
DHHS said it has not performed a formal public health or fiscal analysis specific to the upcoming GLP-1 limits.
“I have concerns about reducing access to really valuable clinical interventions,” Fendrick said.
Bridge Michigan reporter Simon Schuster contributed to this report.
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