Even as Colorado faces a $1 billion budget shortfall and bipartisanly declared affordability crisis, legislators are advancing an anti-obesity insurance mandate that will cost Medicaid $139 million to implement and likely raise private insurance premiums significantly.
Senate Bill 48, sponsored by Democratic Sen. Dafna Michaelson Jenet of Commerce City, would require that insurers cover a range of diabetes-prevention and obesity treatments, from lifestyle therapy to bariatric surgery to medication like Ozempic and Wegovy. Democrats on the Senate Health and Human Services Committee voted on a 5-3 party-line margin Thursday to move the measure ahead to the Senate Appropriations Committee, one year after a similar bill died.
Insurance mandates are not a new strategy, particularly for Colorado legislative Democrats, and the idea of mandating more financial help to combat obesity when some 25% of Coloradans suffer from the condition should not come as a surprise. But what stands out about SB 48 is the massive cost that it would bring to the insurance system, above and beyond almost any bill in memory because of the sky-high prices of the drugs that the proposal covers.
Why treating obesity is so expensive
An analysis by the nonpartisan Legislative Council estimated that covering the drugs at issue — even though the cost of the medications recently fell from $1,200 to $499 a month — will add costs of $76.3 million to the Medicaid program for the fiscal year the begins on July 1 and then $138.9 million the next fiscal year as more people use the new benefits. This comes while the Joint Budget Committee is struggling to cut about $1 billion from the budget, in large part because costs of covering existing Medicaid benefits have skyrocketed as users of the low-income insurance program are treating more acute conditions.
Beyond the cost to the state government, a study found that coverage of the drugs by private insurers would boost industrywide costs $140 million annually within five years. That would require premium increases of between $18 and $24 per month per covered person — about $250 per year — whether someone uses any of the new benefits or not, said Kevin McFattridge, executive director of the Colorado Association of Health Plans.
The debate in the committee showed how legislators are grappling with the individual and societal cost-benefit analysis of such a mandate, as well as the question of how much in short-term costs the state should be willing to mandate to make long-term health gains. The Colorado Division of Insurance conducted an actuarial study to determine what that balance might be, but Insurance Commissioner Michael Conway told the committee that it found the high costs of private insurers providing the benefits — about $54 million a year to start — would be offset only about $5 million to $8 million by improved health.
Pros and cons
Michaelson Jenet, who said she has seen incredible health gains since she began taking the drugs and feels such benefits should be available to everyone, said that widespread employment of the treatments will lower health-care costs. Because obese individuals are more likely to have or get conditions that require pricey treatments, such as diabetes and cancer, halting the downturn in their health before more acute care is needed will help both physically and financially, she and other backers say.
Dr. Carolynn Francavilla, an obesity specialist from Lakewood, said she was alarmed by how much of the debate around the bill focused on the price of the anti-obesity drugs rather than their impact. She couldn’t pinpoint another discussion around health-care mandates where the cost of getting to a positive outcome seemed to outweigh such outcomes in importance, she said.
“If we let people die, it would save us a lot of money,” Francavilla said. “But we don’t do that in medicine, and we don’t do that in society.”
Opponents of SB 48, however, said the extremely high cost of the drugs is a relevant point because there is not enough evidence yet surrounding their efficacy and on how significant their benefits would be if many more people got onto them — and stayed on them.
Obesity treatment benefits “too speculative”
McFattridge noted that Michigan’s costs for such treatments have risen from $5.2 million in 2022 to $36 million in 2024 as the drugs become more popular, but that the state hasn’t seen massive offsets in reduced spending on comorbid conditions. Conway noted that Gov. Jared Polis opposes the bill for the same reasons, saying that efforts to save people money on health care must be balanced with new mandates but that SB 48 appears out of balance toward the cost-increase side.
“The costs are known and exceptionally high,” said Patrick Boyle, a lobbyist for the Pharmaceutical Care Management Association representing pharmacy benefit managers. “And the benefits at this point remain too speculative to justify.”
Committee Republicans agreed. Sen. John Carson, R-Highlands Ranch said that not only must the Legislature consider how to balance its short-term budget, but it must do so in the context that Congress is eying further cuts to Medicaid that could reduce federal funding now coming to the state.
But in a speech that seemed to explain why Democrats advance the bill to a financially focused committee that may have a very hard time passing it any further, Sen. Mike Weissman, D-Aurora, said his support right now is based on the bill’s ideology. Because it offers access to a variety of anti-obesity treatments rather than just to a pricey medication, he feels that legislators must consider its big-picture context of what it could mean for societal health.
“I think that this bill has a challenging path ahead. And I am going to be voting, I guess, in a philosophical way today,” Weissman said. “I’m going to come down on the side to promote access here, at least in spirit.”
Other insurance bills spur similar debates
SB 48 is not the only bill this session that pits the costs of care — or restrictions on those costs — against the wider impacts of new mandates.
House Bill 1174, sponsored by Democratic Reps. Kyle Brown of Louisville and Emily Sirota of Denver, caps the amount that small-group insurance plans and the state’s insurance plan for its employees can reimburse hospitals, to save money. But hospital leaders say that reducing their revenue will force them either to increase costs to other private payers or to eliminate some health offerings — outcomes that could hurt large groups of patients.
That bill cleared its first committee earlier this month and awaits debate on the House floor.
And the newly introduced HB 1297, sponsored by Brown and Democratic Rep. Lindsay Gilchrist of Denver, would raise fees by 1% on all private-market insurance plans to boost funding for the Health Affordability Insurance Enterprise. The enterprise helps to pay for the state’s reinsurance program, fund insurance for some 12,000 undocumented immigrants and keep premiums lower on the state’s health exchange, but the business-opposed bill would raise costs for workers who receive employer-based health insurance but who largely wouldn’t benefit from the enterprise.
