Employers strip coverage as financial woes mount: ‘I don’t have any more options.’
Officials in Belchertown, Massachusetts, were carefully setting aside funds last year to repair crumbling roads and aging buildings when an unexpected $911,000 bill arrived.
The invoice came from the Hampshire County Group Insurance Trust, which provides health coverage for dozens of towns, school districts, and public entities across New England. The trust’s reserves had been rapidly depleted by surging costs — chief among them, the exploding expense of GLP-1 weight-loss drugs.
The trust was on the brink of insolvency, forcing member towns to pay up or risk collapse.
“The universal reaction was shock,” said Lesa Lessard Pearson, chair of Belchertown’s Select Board. The town of 15,000 was forced to dip into long-term savings and slash departmental budgets — including school funding — to cover the shortfall. “It felt like a betrayal,” she said.
Many public employers began covering GLP-1 medications for teachers, police officers, firefighters, and other employees just a few years ago, following the lead of large private companies. Far more workers qualified for and used the drugs than anticipated.
Now, cities and towns across the country are scrambling to contain the resulting surge in healthcare costs. Many point directly to the popular weight-loss drugs as a major driver of budget pressure.
As fiscal years end next month, some municipalities are preparing to drop coverage for GLP-1s when used for weight loss. Others have concluded the drugs’ potential health benefits justify the expense. Still others remain locked into contracts and must continue paying — at least for now.
Labor unions have pushed back aggressively against coverage cuts, arguing that removing access would unfairly burden employees who cannot afford the drugs’ high out-of-pocket prices. In Boston, unions and city officials reached a compromise that will restrict eligibility. In Delaware, public employees delivered emotional testimony in defense of the medications.
“The medication did not replace healthy habits,” one school-district employee wrote. “It helped make them possible.”
In Buffalo, N.Y., officials were stunned by how sharply healthcare costs had risen, largely due to prescriptions for Novo Nordisk’s Ozempic and Wegovy. The added expense has worsened the city’s budget deficit at a time when infrastructure needs are mounting.
“We need a lot,” said Common Council member Mitch Nowakowski. “We have crumbling infrastructure. We need new streetlights. We have parks that need investment. We need new sanitation trucks. We need more equipment for police and fire.”
Buffalo’s plan is tied to its collective-bargaining agreements, making changes politically sensitive. Some officials hope the drugs will eventually reduce long-term costs by improving employee health and lowering emergency room visits, though economists remain divided on whether meaningful net savings will materialize.
A recent National Bureau of Economic Research working paper noted that any potential savings may be offset by increased doctor visits required to monitor side effects.
Novo Nordisk maintains that GLP-1 drugs reduce the risks of cardiovascular disease and Type 2 diabetes. “Peer-reviewed studies suggest these treatments may improve long-term health outcomes and translate into savings across the healthcare system,” the company said.
For many local governments, decisions must be made now, even as the long-term data is still unclear.
In North Attleborough, Massachusetts, town manager Michael Borg initially assumed rising insurance costs signaled broader employee health problems. He soon discovered that prescriptions for Ozempic and Wegovy were a major factor. After the town absorbed a $1.8 million deficit — on top of $1 million in snow removal costs — it had no choice but to limit coverage.
“If anything else happens, I don’t have any more options,” Borg said.
In Cumberland County, North Carolina, leaders are taking a more patient approach. Given the region’s high rates of obesity and diabetes, Chairman Kirk deViere believes pulling coverage now would be shortsighted. They want more time to evaluate whether the drugs ultimately reduce overall healthcare spending.
Other places are moving faster. Fort Worth, Texas, spent $5 million in just six months on two weight-loss drugs and has proposed shifting the full cost to employees amid a $50 million budget shortfall.
In the Hampshire County trust, members voted to eliminate coverage of GLP-1s for weight loss after determining the costs were unsustainable. The drugs accounted for 30% of the group’s pharmacy spending in the first nine months of 2025, despite being used by less than 3% of members.
Several towns have already left the trust, while others are still recovering from the mid-year financial hit. In nearby Montague, school officials cut five jobs and froze hiring after healthcare costs jumped 53% year-over-year.
“The healthcare system is just broken,” said town administrator Walter Ramsey.