Boston Faces Potential Health Insurance Premium Hike Due to GLP-1 Drug Costs

Boston residents could see a significant increase in their health insurance premiums as the city grapples with rising healthcare costs, particularly those associated with GLP-1 medications for weight loss. City officials are considering various options to mitigate the financial strain, including potential changes to coverage and negotiations with unions.

Premium Increases on the Horizon

Ashley Groffenberger, the city’s Chief Financial Officer and Collector-Treasurer, informed the Boston City Council on Monday that health insurance rates for city employees are projected to increase by nearly 23 percent in the fiscal year beginning in July. This represents the highest year-over-year increase in premium costs the city has experienced in recent history. The city budgeted $483 million for all health-related benefits for employees and retirees in the current fiscal year [Boston Herald].

Impact on Employees

These increases will affect city employees directly. For those enrolled in one of the city’s Blue Cross Blue Shield family insurance plans, monthly premiums could rise from $655 to $803, representing an annual increase of $1,773. [Boston Herald]

GLP-1 Medications Driving Costs

A significant driver of these rising costs is the increased use of GLP-1 medications, such as Ozempic and Wegovy, for weight loss. These medications currently account for approximately 14.7% of the projected cost increase from fiscal year 2026 to fiscal year 2027. Costs for GLP-1 drugs are estimated at $31.6 million for the current fiscal year and are expected to jump to approximately $47.4 million next year. [Boston Herald]

Currently, approximately 7.7% of non-Medicare plan members are accessing GLP-1s for weight loss through the city’s health insurance. [Boston Herald]

Proposed Solutions and Union Negotiations

To address the escalating costs, the Wu administration proposed “utilization management” – requiring prior authorization from insurance providers before prescribing certain medications – which could save the city between $8 million and $9 million annually. [Boston Herald] However, the Public Employee Committee, representing unionized city employees and retirees, voted against this change earlier in March. [Boston Herald]

Larry Calderone, president of the Boston Police Patrolmen’s Association, expressed openness to negotiations to find cost-effective solutions even as maintaining coverage for necessary medications. [Boston Herald]

Potential Alternatives and Broader Trends

If the Public Employee Committee does not reconsider its vote, the city may explore joining the Massachusetts Group Insurance Commission (GIC), which recently eliminated GLP-1 coverage for state employees due to budget challenges. Approximately 22,000 GIC members currently use GLP-1 drugs for weight loss, costing the state $46 million. [Boston Herald]

Cuts to GLP-1 coverage are occurring in other states as well, including New Hampshire and North Carolina, citing funding shortfalls. New York City also dropped coverage for weight-loss drugs in 2024. [Boston Herald]

City Revenue Projections

Groffenberger emphasized that the city’s revenues are only projected to increase by 1.5 to 2.5 percent next fiscal year, limiting the city’s ability to absorb the increased healthcare costs. [Boston Herald]

Ashley Groffenberger was appointed Chief Financial Officer (CFO), Collector-Treasurer for the City of Boston in August 2022 and is responsible for all aspects of financial management to support the long-term growth and stability for the City of Boston. [Boston.gov]