Study Shows $1 Trillion Cost Savings For Taxpayers By AddingMedicare Coverage for Weight Loss Drugs

A recently published white paper by the USC Schaeffer Center sheds light on the immense value that Medicare coverage for new classes of weight loss drugs could bring to society. The study estimates that such coverage would result in nearly $1 trillion in societal benefits over a span of ten years.

Obesity stands as one of the most pressing health issues in the United States, with significant implications for mortality rates. Unfortunately, due to the lack of coverage provided by Medicare and most private insurers for weight-loss medications and devices, only a mere 1% of eligible patients have access to these treatments.

Lead author Darius Lakdawalla, the director of research at the USC Schaeffer Center for Health Policy & Economics, emphasizes the gravity of the situation: "Obesity is a leading risk factor for mortality in the U.S. Our modeling shows that new treatments generate substantial benefits to Medicare and its beneficiaries. Developing strategies for unlocking that value should be a priority for policymakers."

To assess the potential benefits of treating individuals suffering from obesity and the corresponding cost-offsets that Medicare and society could gain, the researchers employed the Schaeffer Center's Future Adult Model, an economic-demographic microsimulation model. The findings indicate that enabling Medicare to cover anti-obesity medications could generate approximately $175 billion in cost offsets for Medicare within the first decade alone. Over a span of 30 years, these cost offsets to Medicare could escalate to a staggering $700 billion.

It's important to note that the positive impacts extend beyond Medicare, potentially offering society as much as $100 billion per year in the form of reduced healthcare spending and improvements in the overall quality of life. By ensuring that all eligible Americans receive proper treatment for obesity, the prevalence of the condition within the Medicare population could witness a substantial 53% reduction after the initial decade.

Moreover, the researchers highlight the domino effect that treating obesity could have on reducing the incidence of related diseases. For instance, there could be a 5.5% decrease in the prevalence of diabetes, a 1.2% decline in hypertension, and a 1.7% decrease in heart disease after 10 years.

The current federal law prohibits Medicare from covering most obesity procedures and medications, despite their safety and effectiveness. However, promising legislative initiatives such as the bipartisan Treat and Reduce Obesity Act seek to expand the prescription benefits of Medicare Part D to include FDA-approved drugs for chronic weight management.

Interestingly, the study reveals that over 60% of the cost savings to Medicare would flow into Medicare Part A, which covers hospital care, hospice, nursing facility care, and home care. This could serve as a significant support for Medicare, which currently faces the risk of insolvency by 2028.

Alison Sexton Ward, one of the co-authors of the paper and a research scientist at the USC Schaeffer Center, explains the cascading effect of reducing obesity rates: "Because obesity is associated with many chronic conditions that significantly impact patients' lives—and Medicare's costs—reducing obesity rates has a ripple effect in the prevalence of other conditions."

Additionally, enhancing access to obesity medications could contribute to health equity, as obesity disproportionately affects marginalized communities, including Black, Hispanic, and lower-income populations. More than half of the Black Medicare population is affected by obesity, with two-thirds experiencing hypertension.

Bryan Tysinger, director of health policy simulation at the USC Schaeffer Center and one of the paper's co-authors, emphasizes the disparities faced by historically marginalized communities and the significance of addressing the issue: "Black and other historically marginalized communities have been disproportionately burdened by obesity."

The researchers propose that outcome-based valuation models, including innovative pricing approaches that allow for real-world evaluation of treatments while encouraging broad coverage, could ensure access to obesity treatments for all patients who would benefit from them.

Dana Goldman, co-director of the USC Schaeffer Center and dean of the USC Price School, highlights the potential of novel pricing solutions by drawing a parallel to the impact of drugs lowering cholesterol and blood pressure: "About half the decline in U.S. deaths from coronary heart disease over the past 50 years can be attributed to new drugs to lower cholesterol and blood pressure. Now imagine if Congress had prohibited coverage for these lifesaving drugs. Novel pricing solutions can ensure access for all patients who would benefit from these important new anti-obesity treatments."

This comprehensive study underscores the significant value and potential societal impact of providing Medicare coverage for weight loss drugs. With the right policies in place, the fight against obesity can take a transformative turn, benefiting individuals, Medicare, and society as a whole.