How To Make Medicaid And Medicare Cover GLP-1s--And Get It Done Before The Midterms

Recently Dr Oz floated a trial balloon, signaling that there might be news soon on the prospect of covering GLP-1 drugs via Medicaid and Medicare.

The obstacle is simple: statutory language prevents Medicaid and Medicare from covering drugs for "weight loss." However, this provision was passed at a time when such drugs were largely ineffective and fad driven. Now that GLP-1s are on the market, the public health calculus has completely changed. These drugs are massively effective, and obesity is a massive cost to the taxpayer.

The most straightforward path to achieving coverage is through "regulatory reinterpretation." In other words, CMS would simply change its interpretation of the rules and declare that coverage of GLP-1 is legal.

The Biden administration tried to do this. The legal theory rests on the statutory text of Section 1927(d)(2)(A) of the Social Security Act, which excludes from Medicare Part D coverage "agents when used for anorexia, weight loss, or weight gain." The critical phrase is "when used for"—purpose-oriented language that focuses on the intent of prescribing, not merely the pharmacological effect. The Biden administration argued that drugs used for cosmetic weight loss are excluded, but drugs used for treating a chronic disease (where weight loss happens to be the therapeutic mechanism) are not excluded, just as cancer drugs that cause weight loss remain covered because the purpose is cancer treatment.

This interpretation builds directly on existing CMS policy, or so this argument goes: the Medicare Prescription Drug Benefit Manual explicitly states that drugs for AIDS wasting and cachexia are not excluded as "agents used for weight gain" when the purpose is disease treatment. The Biden administration's logic was that if CMS already interprets the exclusion as not applying when treating disease (AIDS wasting), the same interpretive principle should apply to obesity, which has been recognized as a chronic disease by the AMA since 2013, the CDC, NIH, WHO, and FDA (through multiple disease-indication approvals beyond cosmetic weight loss). The reinterpretation was framed not as creating new authority but as applying a consistent interpretation across disease states: the statutory exclusion targets cosmetic/lifestyle use, not bona fide disease treatment with medications that happen to affect weight.

The Biden administration did not have time to finalize the rule, and the Trump administration (foolishly in our view) threw the Biden administration's procedure in the wastebasket, probably out of misplaced small-government zeal. (We would note that given the massive costs of obesity to the taxpayer, covering GLP-1s would actually save money.)

Should the Trump administration reconsider?

There's a delicious irony here: one of the things that makes this reconsideration risky is the end of the Chevron doctrine, a goal conservatives have long striven for. Under Chevron, courts would merely have ascertained whether the new interpretation is "rational", but now they will take much more care in making sure that CMS is sticking to the best interpretation of statutory language.

Legal experts we have consulted tend to believe that the rule change would be defeated in courts. But it's not necessarily true.

In particular, courts look at whether an agency's new interpretation is in line with previous interpretation, and in this case it would be true. CMS already has pre-existing policy that states that drugs that cause weight loss as a by-product of treating another illness can be covered.

Perhaps equally importantly, given the Supreme Court's recent turn against nationwide injunctions, there is good reason to believe that while the case winds its way through the court system, the Administration could still implement the policy, delivering concrete benefits to citizens.

What's more, we can do it quickly.

Under normal Administrative Procedure Act processes, Medicare coverage expansion would require 18-24 months: drafting a Notice of Proposed Rulemaking (3-4 months), publishing with a 60-90 day public comment period, reviewing and responding to comments (3-6 months), OMB review (90+ days), final rule drafting and clearance (2-3 months), Federal Register publication, and an effective date typically 60 days after publication to allow regulated entities time to prepare systems and processes. This deliberate pace makes sense for routine policy adjustments, but it's devastating when applied to a public health crisis affecting 42% of Medicare beneficiaries and 40% of Medicaid enrollees.

What can we do, then?

The best precedent here is (another irony) the Covid-19 vaccine mandate, where CMS managed to go from publication to full implementation in 60 days.

The legal mechanism is straightforward: Section 553(b)(3)(B) of the Administrative Procedure Act allows agencies to bypass normal notice-and-comment procedures when they establish "good cause" that such procedures are "impracticable, unnecessary, or contrary to the public interest." Section 1395hh(b)(2)(C) of the Social Security Act provides parallel authority specifically for Medicare rules.

Thus with the vaccine mandate. On November 5, 2021, CMS published an IFR requiring healthcare worker vaccination. The rule took immediate legal effect upon publication, with Phase 1 implementation 30 days later and full implementation within 60 days. The concurrent 60-day comment period ran while implementation proceeded. Crucially, when states challenged this rule seeking preliminary injunctions, the Supreme Court stayed the lower court injunctions and allowed implementation to continue, finding the balance of equities "strongly favored" the government because patient health outweighed provider compliance costs.

Furthermore, our research has found that major Medicare coverage expansions have been implemented primarily through sub-regulatory guidance, with formal rulemaking following years later. This "guidance-first" approach dramatically accelerates timelines.

The Inflation Reduction Act's insulin cap provides the blueprint. Signed August 16, 2022, Part D coverage became effective January 1, 2023, just 4.5 months later. CMS implemented this entirely through HPMS memoranda to Part D plans, not rulemaking. The agency didn't publish formal regulations codifying the insulin cap until April 2025—2.5 years after implementation. Turns out, as the kids say, "you can just do things."

The mechanism works because CMS possesses direct authority over Part D plan contracts through 42 CFR Parts 422-423. HPMS (Health Plan Management System) memoranda are binding operational instructions that don't require APA notice-and-comment. For the insulin cap, CMS simply issued guidance in September-December 2022 specifying that plans must implement the $35 cost-sharing cap. Plans had no choice but to comply since it was a condition of contract approval.

We estimate that if CMS starts issuing binding memoranda in November 2025, patients can receive their first injections by April-May 2026.

It's worth giving it a shot.

Policy News You Need To Know

#Shutdown #ACASubsidies — Republican leadership is quietly laying groundwork for a potential ACA subsidy extension, reports Politico (so who knows if it's true). According to the report, the internal discussions, involving House and Senate leadership plus White House officials, center on attaching a scaled-back, two-year extension to funding bills once the government reopens, with several conditions on the table: income caps, minimum out-of-pocket premiums, or grandfathering current enrollees while blocking new enrollment. So, crucially, it's not a shutdown climb-back option. Apparently even Freedom Caucus members like Andy Harris and Chip Roy are signaling openness to a broader health care package, provided it includes a complete phase-out of the COVID-era subsidies and adds conservative priorities like expanded association health plans and HSAs. The proposed path forward would require a Trump endorsement and bipartisan support. Leadership would be wise to keep these talks purely exploratory until Democrats drop their shutdown ultimatum. The key takeaway is that while we're preparing for what a post-shutdown deal might look like, we cannot reward Democrats' extortion tactics by negotiating under duress.

#ACASubsidies — Speaking of, important piece in the WSJ by Chris Jacobs debunking (debunking!) the Democrat talking point that expiration of ACA subsidies would cause premiums to double. Most would pay ~$50-$100 more a month if the credits expire, he tabulates.

#Shutdown — Speaking of, headline from Axios: "Jeffries rejects GOP bill to pay federal workers and troops"

#Shutdown — Speaking of, fun little item from The Hill saying that Democrat Senators are afraid of reopening government because they're afraid of their activist base.

#Shutdown — Speaking of, the administration is working through some creative budgetary mechanisms to address a critical shutdown challenge: keeping air traffic controllers on the job during week four of the shutdown, per Politico. With over 13,000 controllers facing a $0 paycheck next week and monthly payroll costs exceeding $500 million, OMB Director Vought has acknowledged the team is "playing budgetary twister" to find appropriately purposed funds that can be reprogrammed—something that historically requires congressional action. The administration has already established precedent by redirecting roughly $8 billion in unobligated DoD R&D funds to cover military pay, and they're circulating documentation on historical executive authority for such transfers. The urgency is clear: memories of the 2019 shutdown ending after East Coast controller callouts cascaded into nationwide delays are driving concerns about maintaining aviation safety and avoiding similar political pressure. There is, of course, another solution: members of the executive branch could just log into the computer at Treasury that handles financial transfers and make the payments.

#ItsTheEconomyStupid — The administration is trumpeting the fact that the price of oil per gallon dropped below an average of $3.00 nationwide, as well they should. This is the first sub-$3 level since December 2020. While record US crude output exceeding 13 million barrels per day has undoubtedly contributed to this decline, as a consequence of administration policy, the drop also reflects broader global trends, including an oil market oversupply driven by increased production from OPEC+ nations and non-OPEC players like Brazil and Canada, which, combined with sluggish demand from China and Europe, has pushed Brent crude below $70 per barrel.

#ItsTheEconomyStupid #Jorbs — In other news, OpenAI is hard at work replacing investment bankers with ChatGPT, reports Bloomberg. Don't cry.

#ItsTheEconomyStupid #BigGovSucks #OrDoesIt — Interesting, little-noticed piece of news: the Trump administration has reached a settlement with the American Federation of Teachers to resume processing student loan forgiveness under two income-driven repayment plans affecting approximately 2.5 million borrowers, even though both programs are slated for sunset by July 2028 under the OBBBA. The Post has the report. Ed frames this as a course correction necessitated by Biden-era overreach, arguing that while courts rightfully blocked the previous administration's "illegal mass student loan forgiveness" schemes (particularly the SAVE plan), the resulting litigation inadvertently froze lawful discharges that Congress had already authorized through existing IDR statutes. Politically, this is probably a good idea. The loans had been frozen for so long that, righty or wrongly, many recipients would have seen a demand to pay as an incomprehensible shock.

#DEI — The Pacific Legal Foundation scored a significant win in the fight against racial preferences when UC San Diego quietly eliminated its blacks-only scholarship program rather than defend it in court against a challenge under the Ku Klux Klan Act, reports the invaluable Aaron Sibarium at the Free Beacon. The university had attempted an end-run around California's constitutional ban on racial preferences by outsourcing the Black Alumni Scholarship Fund to a private nonprofit, but PLF's lawsuit argued this arrangement constituted an illegal conspiracy between state actors and private parties to discriminate based on race. This victory represents an important proof of concept that could be used against similar programs at Berkeley, UT Austin, and other public universities that have tried to insulate race-based scholarships from legal challenges through private foundation arrangements. What's especially encouraging here is that the legal theory, using Reconstruction-era civil rights laws against modern attempts to discriminate, turns progressive arguments on their head and could provide a powerful tool for dismantling the infrastructure of racial preferences that universities have tried to preserve post-Students for Fair Admissions.

#FiveEyes — President Trump and Australian Prime Minister Albanese signed a series of agreements yesterday covering critical minerals, defense procurement, and economic cooperation. The main components include a Critical Minerals Framework with over $3 billion in joint government investment (focused on projects with an estimated $53 billion in recoverable resources), Australian defense purchases totaling roughly $6 billion for Anduril underwater vehicles and Apache helicopters, and $2 billion in Australian contributions to the US submarine industrial base. On the economic side, Australian superannuation funds are committing to increase US investments to $1.44 trillion by 2035. The package also includes expanded US beef market access in Australia, a NASA-Australian Space Agency framework agreement that brings Australia into the Artemis program with a lunar rover contribution, and plans for a bilateral Technology Prosperity Deal on AI and quantum technologies. Two notes. The first is that the most crucial aspect is clearly the mineral issue, sourcing rare earths from somewhere other than China, from Australia's vast and rich interior. The second is that the defense part will remain darkly funny for some, as Australia pulled out of a French submarine deal under diplomatic pressure in order to buy American submarines…which haven't arrived and aren't likely to arrive soon. It's nice to be the empire.

#ExecutiveAuthority — Illinois has escalated its confrontation with the Trump administration by urging the Supreme Court to reject the president's authority to deploy National Guard troops to Chicago for immigration enforcement operations, setting up a significant constitutional showdown over federalism and executive power, the good folks at JustTheNews report.

#VotingRights — But they told me this never happened? "Texas finds thousands of illegal immigrants registered to vote on state voter rolls."