Health Insurance Market: US Employers Cut GLP-1 Drug Coverage

14% of US Employers to Drop GLP-1 Weight-Loss Drug Coverage in 2027 Amid Rising Healthcare Costs 

NEW YORK, United States August 25, 2026 A new survey released by the Business Group on Health has found that approximately 14% of employers in the United States have already dropped or plan to eliminate coverage for GLP-1 weight-loss drugs in 2027, as escalating pharmacy and medical costs place mounting pressure on employer-sponsored benefit programs. The development carries significant implications for the global Health Insurance Market, where rising healthcare expenditure and shifting benefit design strategies are reshaping coverage decisions across the employer segment. 

The Business Group on Health, a national organization advocating for employer health policy and benefits solutions, released the findings on Tuesday. According to the survey, healthcare costs are projected to increase by 9.2% in 2027 if employers do not implement active cost management measures up from an 8.5% increase recorded in 2026. Two-thirds of employers surveyed reported rising utilization of GLP-1 medications, which include Novo Nordisk's Wegovy and Eli Lilly's Zepbound and Foundayo. 

The share of employers covering GLP-1 weight-loss drugs has already declined from 72% in 2025 to 60% in 2026, reflecting a broader reassessment of high-cost specialty drug coverage. Pharmacy costs now account for 25% of total employer healthcare spending and are expected to rise by a further 12% in 2027 unchanged from the prior year's rate of increase. Ellen Kelsay, president of the Business Group on Health, noted that the situation represents "an unfortunate new reality for employers, who now face growing difficulty in budgeting and forecasting," calling for a more disruptive approach to delivering value and improved health outcomes. 

Beyond pharmaceutical expenditure, cancer emerged as the most acute cost driver across the employer segment, cited by 70% of surveyed firms a notable increase from 58% in 2025. Musculoskeletal and cardiovascular conditions ranked as the second and third most significant cost drivers, with treatments for these conditions increasingly involving complex and high-cost therapies. The survey covered employers ranging from those with fewer than 5,000 employees to organizations with workforces exceeding 100,000. 

Key Highlights: 

• GLP-1 Coverage Contraction: The proportion of US employers covering GLP-1 weight-loss drugs declined from 72% in 2025 to 60% in 2026, with 14% of employers having already dropped or planning to eliminate coverage entirely in 2027. 

• Projected Cost Escalation: Employer healthcare costs are forecast to rise 9.2% in 2027 absent active cost management interventions, with pharmacy costs representing 25% of total healthcare spending expected to increase by 12%. 

• Cancer as Primary Cost Driver: Cancer was identified as the most acute healthcare cost driver by 70% of surveyed employers in 2026, up from 58% in 2025, reflecting increased utilization of complex oncology therapies. 

• Benefit Redesign Underway: In response to cost pressures, employers are accelerating adoption of biosimilars, reducing coverage for complex specialty drugs, and exploring alternative pharmacy benefit arrangements to contain expenditure. 

Analyst Insight: 

According to analysts at Next Move Strategy Consulting, the global Health Insurance Market is predicted to reach USD 3,974 billion by 2030, expanding at a CAGR of 7.0% from 2024 to 2030. NMSC analysts note that the accelerating withdrawal of GLP-1 drug coverage by US employers signals a structural inflection point in employer-sponsored health insurance, where the tension between benefit comprehensiveness and cost sustainability is intensifying. As pharmacy expenditure continues to outpace premium growth, insurers and plan sponsors are expected to accelerate benefit redesign, formulary restructuring, and value-based care arrangements trends that will have lasting implications for coverage breadth, member health outcomes, and insurer profitability across the employer-group segment through the remainder of the decade. 

Industry Outlook: 

The Business Group on Health's findings underscore a broader recalibration underway in the employer-sponsored health insurance segment, as organizations of all sizes confront the dual challenge of rising medical utilization and escalating specialty drug costs. The contraction in GLP-1 coverage is likely to intensify scrutiny of high-cost pharmaceutical benefits across the industry, prompting insurers, pharmacy benefit managers, and plan sponsors to pursue more rigorous cost-effectiveness frameworks for specialty drug inclusion. 

As healthcare cost inflation continues to outpace premium adjustments, the health insurance sector faces sustained pressure on underwriting margins, particularly in the individual and employer-group segments. The trajectory of employer benefit decisions in 2027 will serve as a critical indicator of the industry's capacity to balance cost containment with the delivery of clinically meaningful coverage a challenge that is expected to define competitive positioning across the health insurance landscape in the years ahead. 

Source: Reuters

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Prepared By: Sanyukta Deb