Gutting Medi-Cal’s weight loss drug coverage will cost California more in the long run

California just cut off access to critical anti-obesity drugs for hundreds of thousands of patients.

Under the new budget signed by Gov. Gavin Newsom, Medi-Cal — the state’s Medicaid program — would no longer cover weight loss drugs, such as Wegovy and Zepbound, unless they’re prescribed to treat diabetes. The measure is intended to promote fiscal responsibility. By cutting this drug coverage, policymakers say they’ll be able to save more than $600 million by 2029. 

But they’ve got it all wrong.

Obesity is a significant driver of skyrocketing health care spending because it’s a major risk factor for other costly, chronic conditions. Keeping evidence-based obesity treatments like these drugs accessible would more than pay for itself in the long run by making Californians healthier and more productive. 

In California, roughly 3 in 5 adults are overweight or obese, including disproportionate numbers of low-income Californians and people of color. That puts them at higher risk of developing numerous other chronic conditions, including Type 2 diabetes, heart disease and certain cancers.

Overcoming those risks can be challenging, especially given that genetics alone may account for up to 70% of people’s differences in body weight. That’s a major reason why lifestyle interventions alone have been largely unsuccessful at stopping the spread of chronic conditions — and why the arrival of anti-obesity drugs in recent years has been so revolutionary.

In 2023, Medi-Cal’s coverage of the drugs for weight loss allowed more than 660,000 Californians to obtain the life-changing treatments. That same year, the national obesity rate dipped for the first time in a decade.

The rapid uptake of these drugs hasn’t merely improved people’s lives. It also has provided policymakers with a new way to downsize health care spending.

Some of my recent research, published in JAMA Network Open, highlights the significant link between weight loss and lower health care costs. Among Medicare beneficiaries with obesity and at least one other related health condition, like diabetes, just a 5% decrease in body weight was associated with a $1,262 drop in annual health care spending, or 7% in savings on average. A 25% weight reduction — which is not at all uncommon among people on anti-obesity drugs — led to an astonishing $5,442 drop in yearly health care costs, or 31% in savings.

This suggests Newsom’s plan to slash health care spending by withdrawing coverage for these drugs could actually increase health care spending in the long run.

According to Newsom, covering the drugs under Medi-Cal would cost California $85 million in fiscal year 2025-26, rising to $680 million by 2028-29. Those figures are overestimates, even before accounting for the savings from improved health. Once federal matching funds and drug manufacturer rebates are factored in, the true upfront cost to California would be much lower.

The state’s supposed savings also pale in comparison to the cost of untreated obesity, which in 2022 depressed economic activity in California by nearly $90 billion and cost state government more than $10 billion in direct health care spending and foregone tax revenue, according to an independent report.

Based on the research I’ve done, California could save about $3,000 per patient by continuing to cover weight loss drugs.

It’s true that anti-obesity drugs require substantial upfront outlays from Medi-Cal. But it’s far more cost effective than paying for patients’ health complications down the road. Continuing that coverage is a smart investment in California’s future.