GLP-1 Coverage and Its Impact on Employment-Based Health Plan Premiums: A Simulation-Based Analysis

Summary

The rapid growth in usage of glucagon-like peptide (GLP-1) drugs — initially developed for diabetes but now widely used for weight management — is reshaping employment-based health benefits. As these medications are increasingly prescribed to individuals with obesity, and even to those who are overweight without comorbidities, employers are grappling with how to manage access and costs. While the clinical promise of GLP-1s is expanding, their high price point and growing demand have raised concerns about their impact on premiums.

This Issue Brief uses a simulation model to assess how GLP-1 coverage may affect employment-based health insurance premiums under varying assumptions related to drug costs, adherence rates, cost-sharing structures, and eligibility criteria. Drawing on data from MarketScan and current literature examining GLP-1 usage trends, the model estimates how different combinations of these variables influence total spending and insurance premiums for large and small firms.

• Currently, GLP-1 drugs are very expensive. According to a recent estimate, the net price for a 30-day supply of GLP-1 drugs ranges from $617 to $766.
• Additionally, GLP-1 usage is relatively low: Only 3 percent of non-elderly adults covered by employment-based health insurance had a GLP-1 claim in 2022, and a 2024 survey found that one in eight respondents had ever taken a GLP-1. However, there is a massive pool of potentially eligible enrollees. Over 40 percent of privately insured adults — more than 57 million people — are clinically eligible for GLP-1 drugs resulting from diagnoses of diabetes, obesity, or being overweight with additional risk factors.
• Employer coverage is expanding: 55 percent of employers cover GLP-1s for diabetes, and 36 percent cover them for both diabetes and weight loss.
• Perfect adherence leads to higher premiums: More consistent drug use may improve individual well-being and health outcomes but drives up overall plan spending in the short term. Simulations assuming perfect adherence result in premium increases that are several percentage points higher than simulations assuming adherence patterns observed in recent studies.
• The impact of expanding GLP-1 coverage on employment-based health insurance premiums is sensitive to assumptions surrounding uptake and drug prices:
  • Using real-world drug cost scenarios, premium increases ranged from 5.3 percent to 13.8 percent, depending on adherence, cost-sharing, and eligibility assumptions.
  • Using a hypothetical lower-priced GLP-1 with a $200/month cost, increases ranged from 1 percent to 3.9 percent, reflecting the potential for future price reductions to mitigate cost pressures.
• Cost sharing helps but does not fully offset cost growth: Introducing a $90 copay reduced premium increases across all scenarios by 1–2 percentage points but could not fully neutralize the effect of expanded eligibility or perfect adherence.
• Broad eligibility significantly increases cost impact: Expanding coverage to include individuals who are overweight — along with those who are obese or have diabetes — resulted in notably higher premiums due to the increased size of the eligible population.
• While GLP-1s may eventually generate some medical cost reductions, these benefits would not be manifested immediately, and there is no evidence to suggest that the savings would fully offset GLP-1 prices. Long-term GLP-1 usage is necessary to achieve weight loss. Furthermore, studies of GLP-1 discontinuation indicate that patients regain weight they lost while taking GLP-1s, and improvement of cardiovascular risk factors regress towards the patient’s baseline, suggesting that GLP-1s may need to be taken indefinitely, which could further increase cost pressures on insurance premiums.

As GLP-1 drugs gain FDA approval for a broader range of conditions such as cardiovascular disease, employers may need to revisit coverage policies. Without strategies such as targeted eligibility, prior authorization, or alternative payment models, rising GLP-1 utilization could drive sustained increases in health insurance premiums, affecting both employers and employees in the long term.