employers’ GLP-1 – Employers are debating whether to cover GLP-1 therapies for weight loss and diabetes, even as a panel convened June 9 said the cost of not covering them could be higher. Lilly’s Kevin Hern described the situation as a “prisoner’s dilemma,” driven by short empl
For years, employers treated obesity treatment like something employees were supposed to handle on their own. Kevin Hern. senior vice president of Lilly Employer. laid that out starkly during a June 9 webinar. describing a moment in 2021 when “all employers had a ‘zero’ in their annual pharmacy budget for obesity management.”.
Now, demand for GLP-1 therapies is surging—and the financial argument for covering them is getting harder to ignore. During the virtual event titled “Will GLP-1s Ease or Escalate Health Care Costs?” Hern joined a panel that included Dr. Lydia Alexander. chief medical officer of the weight care platform Enara Health. and Robert Deshaies. chief operating officer of the benefits business at fintech company WEX.
They agreed on one basic tension: covering obesity medications could be expensive, but the costs of not covering them may be worse.
One of the panel’s anchor figures came from a 2025 survey published in the Journal of Managed Care and Specialty Pharmacy. It says 100 million American adults are living with obesity, and more than $261 billion in annual U.S. health spending can be attributed to complications tied to obesity.
Alexander—also the immediate past president of the Obesity Medicine Association—argued that obesity isn’t a single condition with a single solution. She called it the “disease of diseases,” driving at least 250 conditions, and said the country may be underestimating what it costs to do nothing.
“The most common conditions that are the largest cost centers in the U.S. economy can all be treated by treating the disease of diseases,” Alexander said during the webinar. “And so we’re underestimating the cost of doing nothing, which is not zero.”
She also warned that refusing coverage is not financially neutral. “Not covering GLP-1s. is not a neutral financial position. either. ” she said. framing it as deferring and compounding multiple illnesses. She cited type 2 diabetes, cardiovascular disease, kidney disease, liver disease, obstructive sleep apnea, and even certain types of cancer.
But the question that hung over the discussion was why coverage still isn’t universal. The panel noted that only 36 percent of employers cover GLP-1 therapies for both diabetes and weight loss.
Hern said part of the problem isn’t a lack of awareness. It’s timing and incentives.
He described the situation as a “prisoner’s dilemma,” where full long-term benefits require cooperation across employers and stakeholders—but some individual companies may still feel it pays to wait. His point centered on how quickly employers—and employees—cycle through the system.
The average employee tenure in the U.S. is 3.9 years, according to the Bureau of Labor Statistics. And some GLP-1 benefits, including a reduction in adverse cardiovascular events, can take up to 12 months to materialize.
With drug costs still high, Hern said some employers may choose to delay coverage, betting that competitors will absorb the early costs while their own workforce gradually becomes healthier.
“It’s an ‘every day’ challenge to convince employers that GLP-1 coverage benefits extend to their organizations, not just the individual patients,” Hern said.
To make that case, Hern pointed to workforce retention. For employers with high turnover—retailers operating on thin margins were his example—the math can look different. But even in those settings, he said, employees who stay beyond their first year often remain another five or six years.
That suggested a pathway: structure GLP-1 coverage around tenure. much like retirement benefits. with eligibility that “vests” after a defined period of employment. He also described GLP-1 coverage as a potential magnet for new hires. Deshaies said WEX is seeing employee expectations around these benefits already. and he pushed back on the assumption that younger workers wouldn’t care.
“You would think that the younger generations, Millennials and Generation Z, wouldn’t be as concerned, Millennials and Generation Z, wouldn’t be as concerned [with GLP-1 coverage] as our Boomers and Xers. Actually, it’s just the opposite,” Deshaies said.
WEX’s research. he added. found that more than 70 percent of employees would take a pay cut for a more comprehensive benefits package. In the longer view, Alexander said, the impact of a healthier workforce extends beyond direct medical costs. She pointed to reduced absenteeism, early retirements, and disability-related departures.
“We’re going to see that when adding indirect to direct costs—in terms of cost effectiveness, affordability and quality—we’re definitely going to be hitting the correct mark, which makes these medications feasible with correct management,” Alexander said.
Yet the panel didn’t pretend employer budgets are standing still. Health care spending is rising, with the 2026 Milliman Medical Index showing it is up eight percent year-over-year per individual employee. Hern argued that this is exactly why the moment feels “transformational,” and why insurance systems remain under strain.
“This is a transformational class [of drugs],” Hern said. “Insurance is hard to work when 40 percent of people have a disease. It doesn’t matter what that disease is.”
He told the webinar audience the challenges employers face now make it “ripe” for innovation, and urged a redesign of benefits packages and the broader health care system so employers can manage the growing bill.
Hern also tied the stakes to longevity. He said individuals with a BMI of 40 or higher have a life expectancy 10 to 15 years shorter than those without obesity. “Those are graduations not seen, daughters not walked down the aisles, grandchildren not held in your arms,” he said. “We want to give years of life back to folks—but it’s going to take a lot of innovation because this is a significantly large class.”.
The event was part of a series of complimentary Newsweek webinars addressing major health care pressures, including financial strain, workforce strain, rapid technological change, and shifting patient demands.
Click here to register for Newsweek’s July 21 webinar. “The ‘Payvider’ Perspective: How Health Systems with Health Plans are Aligning Incentives to Win Patient Trust. ” featuring Andrea Walsh. president and CEO of HealthPartners. Click here to register for the July 28 webinar, “Will the Rural Health Transformation Fund Deliver on its Promise?” featuring Dr. Tim Ferris, vice president, healthcare practice at InterSystems, and Dr. David Carmouche, chief medical and commercial officer at Lumeris.
GLP-1 coverage obesity treatment employer benefits health care costs Lilly Employer prisoner’s dilemma workforce retention Milliman Medical Index obesity medicine