The 3% Problem: Why Cutting GLP-1s Won't Save Your Healthcare Budget
Episode Summary:
As employers face rising health insurance costs—6 to 9% increases on average, double digits for smaller companies—CFOs and benefits leaders are scanning their budgets for cuts. One line item keeps standing out: GLP-1 spending on weight loss and diabetes drugs like Wegovy, Ozempic, and Mounjaro.
The natural question: "What if we just cut these drugs to get our budget back on track?"
But here's what might surprise you: GLP-1 drugs account for only 3% of total healthcare spending.
In this episode of Healthcare Rebuilt, host Boe Hartman sits down with Dr. Rani Aravamudhan, Vice President of Analytic Consulting and Medical Director at Artemis, who analyzed millions of healthcare claims to understand what's really driving skyrocketing costs. While GLP-1 spend rose 124% in two years, Dr. Aravamudhan reveals the real culprits: outpatient visits up 33.7%, professional services up 27.9%, and emergency room visits up 34.3%.
The conversation challenges the impulse to simply cut GLP-1 coverage and instead advocates for a more holistic approach. Dr. Aravamudhan explains that dropping coverage might save money in the short term but could lead to significantly higher long-term costs from diabetes complications, heart disease, and kidney disease. The real issue isn't GLP-1s; it's employers' lack of cost visibility and control across all care categories.
Meet the Guest:
Dr. Rani Aravamudhan
VP, Analytic Consulting & Medical Director | Artemis by Nomi Health
Dr. Rani Aravamudhan leads analytic consulting and serves as Medical Director at Artemis, where she helps employers understand their healthcare spending through data analytics. She and her team analyze millions of healthcare claims to identify cost drivers and help decision-makers move beyond assumptions to data-driven strategies. Dr. Aravamudhan combines clinical expertise with analytics to help employers see the full picture of their healthcare spending, from pharmacy costs to medical claims, and make informed decisions about coverage and care.
Key Takeaways:
"What if that's the wrong question to be asking?" Instead of asking "Can we afford to cover GLP-1s?" employers should be asking "Can we afford not to cover them?" given the long-term costs of untreated diabetes and obesity.
GLP-1s are only 3% of total healthcare spending. While GLP-1 spend rose 124% in two years, it represents roughly 3% of total medical and pharmacy spend. The real cost drivers are outpatient visits, professional services, and emergency room costs.
"It's not just the diabetes or heart disease that needs to be tackled.” Dr. Aravamudhan emphasizes that employers need to look at holistic health outcomes, not just individual drug costs or claims in isolation.
Cutting coverage today could cost you more tomorrow. Dropping GLP-1 coverage might provide short-term savings but risks significantly higher long-term medical spending from diabetes complications, cardiovascular events, and kidney disease.
Prior authorizations can ensure appropriate use. Rather than eliminating coverage entirely, employers can use prior authorization criteria to ensure GLP-1s go to patients who will benefit most—those with diabetes, pre-diabetes, or obesity with comorbidities.
Data transparency is the real lever. The bigger issue is that employers lack claims-level data to see if GLP-1 use is offsetting future medical events. Direct contracting plus real-time analytics give employers actual control over spending.
In This Episode:
· Why 2026 health insurance renewals are showing 6-9% increases (or higher for smaller companies).
· What Artemis's analysis of millions of claims revealed about GLP-1 spending.
· The real cost drivers: outpatient, professional services, and ER visit increases.
· Why GLP-1s represent only 3% of total healthcare spend.
· Long-term health benefits of GLP-1 medications beyond weight loss.
· How cutting GLP-1 coverage today could lead to higher costs tomorrow.
· The role of prior authorization in managing appropriate GLP-1 use.
· Why employers are "buying blind" without complete claims data.
· How direct-to-provider contracting and real-time analytics change the game.
· Practical actions employers can take right now to get ahead of rising costs.
· Dr. Aravamudhan's optimism for employers navigating healthcare cost pressures.
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Have questions about your healthcare costs? Contact Nomi Health to learn more about direct networks, real-time payment systems, and analytics that show you where your money goes.
