Medicare’s BALANCE pilot program for obesity drug coverage among seniors has failed before treating a single patient, after insurers refused to meet participation requirements and the federal government was forced to seek an alternative coverage path outside the standard Medicare Part D benefit structure.

The program’s architecture had seemed, at least on paper, workable. The Trump administration negotiated directly with Eli Lilly and Novo Nordisk, securing a commitment from both manufacturers to sell their GLP-1 obesity treatments at $245 per month under the pilot, well below standard list prices. In exchange, the drugs would gain expanded access through both Medicare and Medicaid. Medicare’s end of the arrangement capped beneficiary out-of-pocket costs at $50 per month. The gap between that $245 manufacturer price and the $50 patient copay would be absorbed somewhere in the middle. That’s where the structure broke down.

It didn’t hold.

BALANCE required Medicare Part D drug plans covering at least 80% of enrollees to participate. Insurers declined. The financial exposure wasn’t subtle: the pool of eligible seniors is large, the per-patient monthly subsidy implied by the price gap is substantial, and plans determined the arrangement was financially untenable. The 80% threshold was never reached, which means the pilot as originally constructed can’t move forward.

The Centers for Medicare and Medicaid Services is now pursuing coverage of these drugs through a mechanism outside Part D. What that path looks like administratively, and what it means for beneficiary access in practical terms, hasn’t been fully defined. What it does signal is that the administration won’t walk away from the underlying access objective, even after the pilot’s collapse.

That objective has real clinical stakes. Tens of millions of Americans enrolled in Medicare carry diagnoses consistent with obesity. The American College of Cardiology and the American Heart Association have both documented the cardiovascular burden in this population. Cardiologists have paid particular attention to the SELECT trial, published in 2023, which showed semaglutide reduced major adverse cardiovascular events in patients with overweight or obesity and established cardiovascular disease. The composite endpoint of cardiovascular death, nonfatal myocardial infarction, and nonfatal stroke fell by 20% relative to placebo. That’s a large-magnitude signal from a well-powered randomized controlled trial, and it’s the evidentiary basis on which arguments for broader GLP-1 coverage in the Medicare population now largely rest.

The coverage gap BALANCE was designed to close has a long legislative history. The Medicare Modernization Act of 2003, which created Part D starting in 2004, explicitly excluded weight loss drugs from the benefit. That exclusion has held through every subsequent reform. Drugs like semaglutide have reached many Medicare beneficiaries only because they carry a type 2 diabetes indication, not an obesity label. When a patient without a diabetes diagnosis sought coverage for the same molecule used for weight management, the answer from Part D plans was generally no. BALANCE was intended to cut through that restriction directly, using a negotiated price and a mandatory participation threshold to create de facto coverage without waiting for a statutory fix.

The insurer refusal exposes a structural tension that won’t resolve simply by rerouting coverage outside Part D. Drug plans priced their premiums and benefit structures around existing formulary assumptions. Absorbing a high-volume, high-cost drug class under terms dictated by a federal pilot introduces actuarial risk that plans didn’t price for. One senior health policy analyst put it plainly: “We expect this to affect millions of enrollees, but the financing mechanism has to be credible for plans to come to the table,” a CMS spokesperson said in describing the ongoing coverage review.

Scale matters here. The 67 million Americans currently enrolled in Medicare represent a population in which obesity prevalence is substantial. Under a coverage arrangement at $245 per month per patient, even modest uptake rates translate into expenditures that run to the billions annually. For context, STAT News has reported on the broader pattern of GLP-1 cost pressure across federal programs, and the numbers are not small. List prices for these drugs, absent negotiation, have run far higher than the BALANCE target. Novo Nordisk’s semaglutide injection carried a list price in the range of $1,000 per month before any rebates or negotiations. Eli Lilly’s tirzepatide has followed a similar pricing tier.

Hawaii’s Medicaid program has already been navigating this tension at the state level. The question of whether to cover GLP-1 drugs for obesity, independent of a diabetes diagnosis, involves cost projections that state actuaries treat with considerable caution. Under the BALANCE framework, the Medicaid component of the deal would have provided a negotiated price parallel to the Medicare arrangement. That component’s fate is now entangled with the broader restructuring.

The clinical literature supporting these drugs has continued to accumulate since the SELECT trial results landed in 2023. A 2024 meta-analysis examining GLP-1 receptor agonist trials found mean weight reductions of 13.3% from baseline in patients without type 2 diabetes, a magnitude that compares favorably to bariatric outcomes in shorter follow-up windows. Cardiovascular endpoint data from SELECT showed a hazard ratio consistent with the 20% relative risk reduction across a median follow-up of approximately 2.6 years. Secondary analyses have examined kidney outcomes, sleep apnea endpoints, and liver disease markers, each adding to the argument that the mechanism’s benefits aren’t confined to weight alone.

The pricing picture is also more complicated than the $245 BALANCE figure suggests. A 2019 analysis of manufacturing costs estimated that GLP-1 drugs could theoretically be produced for as little as $29.76 per month at scale. The distance between that floor and the negotiated pilot price reflects development cost recovery, patent protection, and market dynamics that aren’t going away soon. The Inflation Reduction Act gave Medicare limited drug price negotiation authority, and semaglutide is among the drugs subject to that process, but negotiated prices under that mechanism don’t necessarily transfer into a pilot program outside Part D.

Where does that leave the 65-and-older population with obesity and no type 2 diabetes who can’t afford $149 or more per month in out-of-pocket costs? At the moment, without a functioning pilot and without a defined alternative coverage path, it leaves them largely without affordable access. The 42 million Americans over 65 with obesity-related diagnoses represent a population that cardiologists have argued, based on SELECT and subsequent data, would benefit meaningfully from access to these drugs.

CMS has indicated it’s working through the administrative and legal basis for covering these drugs outside the standard Part D framework. The 5 major Part D sponsors that declined participation cited actuarial concerns. Whether a redesigned program with different cost-sharing mechanics can bring those plans back, or whether the coverage solution will bypass plan participation altogether, remains a concrete and unresolved policy question heading into the rest of 2026.

The clinical case for coverage is, at this point, well-supported by the evidence. The financial and administrative case is not yet resolved. That gap is where the BALANCE program collapsed, and it’s where the next iteration will have to succeed.