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By Alexis Kayser
Healthcare Editor
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Watch the full webinar, "Will GLP-1s Ease or Escalate Health Care Costs?" above.
For years, employers have approached obesity treatment as an individual health issue, according to Kevin Hern, senior vice president of Lilly Employer at the pharmaceutical giant, Lilly USA.
“In 2021, all employers had a ‘zero’ in their annual pharmacy budget for obesity management,” Hern said at a recent Newsweek webinar.
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But as demand for GLP-1 therapies surges and a growing body of research backs their benefits, it’s becoming more difficult for workplaces to dismiss responsibility.
During the June 9 virtual event, “Will GLP-1s Ease or Escalate Health Care Costs?” Hern and his fellow panelists (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) discussed employers’ new reality—and the financial and population health implications of their next moves.
The cost of covering obesity medications may be significant, the trio agreed, but the cost of not covering them could be even higher. One hundred million Americans adults are living with obesity, and more than $261 billion in annual U.S. health spending can be attributed to the complications, according to a 2025 survey published in the Journal of Managed Care and Specialty Pharmacy. Alexander, also the immediate past president of the Obesity Medicine Association, calls it the “disease of diseases,” driving at least 250 conditions.
“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 Newsweek’s event, “and so we’re underestimating the cost of doing nothing, which is not zero.”
“Not covering GLP-1s, is not a neutral financial position, either. It's a decision to defer and compound these different diseases,” including type 2 diabetes, cardiovascular disease, kidney disease, liver disease, obstructive sleep apnea and even certain types of cancer, she added.
Why, then, are only 36 percent of employers covering GLP-1 therapies for both diabetes and weight loss?
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Part of the challenge, according to Hern, is that many employers are struggling to justify investments whose financial returns may take years to materialize. He described the current environment as a “prisoner’s dilemma”: one in which cooperation from all parties is required to fully realize the long-term benefits of obesity treatment, but some individual employers still feel they have incentives to delay action.
The average employee tenure in the U.S. is 3.9 years, the Bureau of Labor Statistics reports. Some GLP-1 benefits, such as a reduction in adverse cardiovascular events, can take up to 12 months to materialize. With drug costs still high, some employers might opt to wait on coverage, hoping competitors absorb the initial costs of treatment while the broader workforce 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. He’s found it helpful to build an argument around workforce retention.
Hern noted that the calculus looks different for employers with high turnover, such as retailers operating on thin margins. But even in those industries, employees who remain with a company beyond their first year often stay for another five or six years. That, he suggested, could create opportunities for employers to structure GLP-1 coverage similarly to retirement benefits, with eligibility tied to tenure and coverage "vesting" after a defined period of employment.
GLP-1 coverage can also be a magnet for fresh talent, per WEX COO Deshaies.
“We're already finding that employees have an expectation around this type of benefit,” he said. “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.”
Health has become such a worthwhile investment for Americans that more than 70 percent of employees would take a pay cut for a more comprehensive benefits package, according to WEX’s research.
A healthier workforce also has lesser-known benefits for workplaces and the overall economy, including reduced absenteeism, early retirements and disability-related departures, Alexander added.
“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,” she said.
Employers aren’t blind to the benefits, Deshaies and Hern agreed. Yet, health care spending is on the rise, up eight percent year-over-year per individual employee, according to the 2026 Milliman Medical Index. The majority of employers need to cover GLP-1 therapies to reap the collective benefit of downstream cost reductions, but many companies are still struggling to make the numbers work.
“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.”
The same challenges of the moment make it “ripe” for innovation, he told the webinar audience, urging a redesign of benefits packages and the health care system to help employers foot a rising bill.
“We think a lot about how to change the game,” Hern said, noting that individuals with a BMI of 40 or higher have a life expectancy that is 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.
“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.”
This event was part of a series of complimentary Newsweek webinars addressing the most critical issues facing health care—including financial pressures, 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.
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