Arizona committee hears large up‑front costs and long‑term benefits in talks over GLP‑1 coverage for Medicaid

Tim Dahl, an independent health economist, and Steve Berg of ACCESS laid out competing but related estimates for expanding obesity treatment coverage for Arizona’s Medicaid program during a legislative study committee hearing.

Dahl, who said he previously worked with Eli Lilly and the American Diabetes Association and provided his figures for illustration, told the committee his microsimulation (under assumptions Dahl described as conservative for some parameters) produces meaningful health gains but a net 5‑year state cost. “Treating obesity is not necessarily going to save you money,” Dahl said, adding his central estimate showed about $110 million in total state‑level spending over five years, roughly $19 million in medical savings and a net state cost of about $91–92 million when the state is assumed to bear 35% of program costs.

Steve Berg, legislative specialist for ACCESS (Arizona’s Medicaid agency), presented ACCESS’s 2024 administrative counts and fiscal scenarios. ACCESS reported roughly 273,000 members with an obesity diagnosis in 2024 and that about 19,161 ACCESS members received a GLP‑1 prescription that year. Berg said other states’ experience is mixed: he cited Pennsylvania’s reported jump from $222 million to $650 million in GLP‑1 spending after broader coverage and noted some states have tightened access with BMI limits or prior authorization in response to rising costs.

Both Dahl and ACCESS highlighted major modeling uncertainties: uptake (Dahl noted the Congressional Budget Office estimate of 3–5% initiation but used 10% per year for his scenario), persistence (Dahl modeled substantial early discontinuation), and price. Presenters discussed a recent federal agreement reported by the administration that would lower GLP‑1 prices to about $245 per person per month for certain federal programs; ACCESS said it was unclear whether state programs would see an immediate point‑of‑sale reduction, a rebate, or some other implementation that would change net state costs.

Chandler Coiner of the Joint Legislative Budget Committee summarized the potential fiscal impact on the state employee health plan: using assumptions provided by the state administration office (ADOA), JLBC showed an illustrative $39 million annual cost to expand coverage for prediabetes and obesity in the state employee plan under specified opt‑in/utilization assumptions. Paul Shannon, ADOA benefits director, cautioned that long‑term net fiscal effects are uncertain because GLP‑1 drugs have only been used for weight‑loss purposes for a few years and real‑world persistence and downstream cost avoidance remain hard to estimate.

Committee members pressed for additional data: more precise utilization and persistence figures from other states that have expanded coverage, recidivism (on/off) rates for GLP‑1 users, and dynamic forecasting that links first‑year uptake to longer‑term reductions in diabetes, cardiovascular events and related care costs.

The committee did not take any formal votes. Members asked ACCESS, JLBC and ADOA to coordinate follow‑up analysis and to return with refined scenarios — including versions that incorporate the federal negotiated price pathway and sensitivity tests for lower uptake — before final recommendations at the committee’s next meeting.

The hearing also underscored tradeoffs the members face: substantial near‑term budget impacts versus potential long‑term health and societal gains. The committee adjourned after scheduling follow‑up work and said it expects additional briefings and data before finalizing recommendations.