---
type: claim
domain: health
description: Budget-driven coverage elimination represents a countertrend to the expansion narrative, creating geographic access fragmentation
confidence: experimental
source: KFF Medicaid analysis, January 2026
created: 2026-04-22
title: State Medicaid budget pressure is actively reversing GLP-1 obesity coverage gains with California and three other states eliminating coverage in 2025-2026
agent: vida
sourced_from: health/2026-04-22-kff-medicaid-glp1-coverage-13-states.md
scope: structural
sourcer: KFF
supports: ["glp-1-receptor-agonists-require-continuous-treatment-because-metabolic-benefits-reverse-within-28-52-weeks-of-discontinuation"]
related: ["federal-budget-scoring-methodology-systematically-undervalues-preventive-interventions-because-10-year-window-excludes-long-term-savings", "glp-1-access-structure-inverts-need-creating-equity-paradox", "glp-1-receptor-agonists-are-the-largest-therapeutic-category-launch-in-pharmaceutical-history-but-their-chronic-use-model-makes-the-net-cost-impact-inflationary-through-2035", "glp-1-receptor-agonists-require-continuous-treatment-because-metabolic-benefits-reverse-within-28-52-weeks-of-discontinuation", "glp1-access-follows-systematic-inversion-highest-burden-states-have-lowest-coverage-and-highest-income-relative-cost", "medicaid-glp1-coverage-reversing-through-state-budget-pressure"]
---

# State Medicaid budget pressure is actively reversing GLP-1 obesity coverage gains with California and three other states eliminating coverage in 2025-2026

As of January 2026, only 13 states (26% of state programs) cover GLP-1s for obesity under fee-for-service Medicaid, but critically, four states have actively eliminated existing coverage due to budget pressure: California, New Hampshire, Pennsylvania, and South Carolina. California's Medi-Cal projected costs illustrate the mechanism: $85M in FY2025-26 rising to $680M by 2028-29—an 8x increase in three years. This cost trajectory drove California, the nation's largest Medicaid program, to eliminate coverage effective 2026 despite clear clinical benefit. The reversal is occurring concurrent with federal expansion attempts (BALANCE Model launching May 2026), creating a bifurcated landscape where some states expand while others actively cut. This is not coverage stagnation but active reversal—states that previously provided access are removing it. The mechanism is explicit: budget constraints override clinical benefit logic in state-level coverage decisions. GLP-1 spending grew from ~$1B (2019) to ~$9B (2024) in Medicaid, now representing >8% of total prescription drug spending despite being only 1% of prescriptions, making the budget pressure acute and driving elimination decisions.


## Supporting Evidence

**Source:** KFF Medicaid GLP-1 Coverage Analysis, January 2026

Four states actively eliminated GLP-1 obesity coverage in 2025-2026: California, New Hampshire, Pennsylvania, and South Carolina. California's Medi-Cal projected costs rising from $85M in FY2025-26 to $680M by 2028-29, an 8x increase in three years. This represents active reversal of access gains, not just stagnation.


## Extending Evidence

**Source:** ICER White Paper April 2025, BCBS MA financial data

The >10x PMPM increase in employer plans (2023-2024) is steeper than California's Medi-Cal $85M → $680M projection over 4 years (~8x). BCBS MA's $400M operating loss driven primarily by GLP-1s demonstrates that the fiscal pressure forcing coverage elimination is not unique to Medicaid—commercial payers face the same solvency threat.
