California's Governor Gavin Newsom unveiled a proposal Wednesday that would eliminate Medi-Cal coverage for popular weight loss medications Ozempic and Wegovy, citing the need to address significant cost overruns in the state's health insurance program for low-income residents.
The proposal, which would take effect January 1, 2026, aims to save the state $85 million in the 2025-26 fiscal year, with projected savings reaching $680 million by 2028-29. The measure comes as California grapples with a $12 billion budget deficit and follows a $6.2 billion shortfall in the Medi-Cal budget earlier this year.
Surging Prescription Rates Drive Costs
Prescription rates for these medications have skyrocketed among Medi-Cal's nearly 15 million enrollees. Data from the U.S. Centers for Medicaid and Medicare Services reveals that Wegovy prescriptions in the Medi-Cal program jumped from 15,000 in 2022 to 181,000 in 2023—a twelve-fold increase. Similarly, Ozempic prescriptions rose from 178,000 to 480,000 during the same period.
In fiscal year 2023-24, overall prescription drug spending in Medi-Cal approached $15.2 billion, representing a 10% increase from the previous year. Of this amount, approximately $733 million was spent on Ozempic and Wegovy in 2023 alone, not accounting for pharmaceutical rebates.
"We had to tighten things up," Newsom stated during his budget presentation, though he did not specifically mention the weight loss drugs. The proposal maintains Medi-Cal coverage for Ozempic when prescribed specifically for diabetes treatment.
Clinical Impact and Concerns
The proposal has sparked significant concern among healthcare professionals who treat obesity, which affects an estimated 18 million adults in California according to the UCLA Center for Health Policy Research.
Dr. Wayne Ho, a Los Angeles obesity specialist and researcher, expressed alarm about the potential consequences: "It is the best tool I have had as a primary care physician in practicing preventative medicine." He warned that patients would likely regain lost weight and lose associated health benefits such as improved blood pressure and cholesterol levels if coverage is discontinued.
Liz Helms, president of the California Chronic Care Coalition, questioned the decision's impact on current patients: "This is a bad decision. The people who are already taking this medication, what's going to happen to them?"
Without insurance coverage, these medications would cost patients more than $1,000 per month—an unattainable expense for most Medi-Cal recipients, whose income cannot exceed $21,597 annually for individuals or $44,367 for a family of four.
Medication Mechanism and Current Limitations
Both Ozempic and Wegovy contain semaglutide as their active ingredient and are manufactured by Danish pharmaceutical company Novo Nordisk with no generic alternatives available. The medication works by mimicking the GLP-1 hormone, which helps regulate blood sugar and appetite.
Semaglutide has demonstrated significant efficacy in treating obesity, a chronic disease that drives up healthcare costs by contributing to numerous comorbidities including heart disease and diabetes.
Currently, Medi-Cal already implements cost-containment measures, limiting Wegovy dispensing to one carton of four pen injectors every 28 days. Patients self-administer these injections weekly.
Contrasting Perspectives
Not all stakeholders oppose the proposed cuts. The California Association of Health Plans supported Newsom's proposal, stating it "should send a strong signal to the Legislature that they should reconsider mandating that health plans cover these costly drugs for weight loss without the proper clinical safeguards in place."
Unlike some other medications, federal law does not require state Medicaid programs to cover weight loss drugs. California had previously opted to include them in its Medi-Cal formulary.
The proposal will now be considered by the state Legislature as part of broader budget negotiations to address California's fiscal challenges. For Medi-Cal patients currently benefiting from these medications, the future remains uncertain as policymakers weigh fiscal constraints against potential health impacts.
