From modeling anti-obesity medication uptake scenarios across Medicare, Medicaid, and commercial plans since early 2025, the CMS GLP-1 Bridge’s $50 copay structure introduces variables that standard Part D actuarial models were not built to handle. The program operates under Section 402 demonstration authority, placing it alongside rather than within the Part D benefit. That distinction matters for every assumption in a plan actuary’s bid model: the $50 copay does not count toward true out-of-pocket costs (TrOOP), the $245 negotiated net price does not count toward gross covered prescription drug costs (GCPDC), and Part D sponsors do not carry risk for Bridge-eligible drugs. This is not a formulary addition. It is a parallel federal payment channel that removes GLP-1 obesity drugs from the Part D risk-sharing framework entirely.

The timing compounds the modeling challenge. CMS paused the BALANCE model’s Part D component on April 21, 2026, one day after the plan application deadline, when participation failed to reach the required 80% NAMBA-weighted enrollment threshold. The Bridge extension through December 31, 2027 followed immediately. With 2027 Part D bids due to CMS on June 1, 2026, plan actuaries have roughly three weeks to recalibrate assumptions for a benefit environment where GLP-1 obesity coverage exists but lives entirely outside their plan’s financial risk.

$50/mo
Beneficiary Copay (Outside Deductible and TrOOP Cap)
$245
Negotiated 30-Day Net Price per Manufacturer
$66.13
GLP-1 PMPM in Q4 2025 (92% YoY Growth)

Program Mechanics: What the Bridge Covers and How Payment Flows

CMS Administrator Dr. Mehmet Oz announced the Medicare GLP-1 Bridge on May 7, 2026, framing it as a cost access program: “These treatments are a major medical advancement, but too many seniors are currently unable to access them due to high cost. The Medicare GLP-1 Bridge changes that by making these medications more affordable and accessible.” The program runs from July 1, 2026 through December 31, 2027, an 18-month demonstration window.

Three drug families qualify under the Bridge:

  • Wegovy (semaglutide) by Novo Nordisk, including all injectable formulations and the newer tablet form. Pre-deal list price was approximately $1,350 per month; the negotiated Medicare price is $245 for a 30-day supply.
  • Zepbound (tirzepatide) by Eli Lilly, restricted to the KwikPen formulation. Pre-deal list price exceeded $1,080 per month; negotiated down to $245.
  • Foundayo (orforglipron) by Eli Lilly, the first oral GLP-1 receptor agonist that can be taken without food or water restrictions. FDA approved April 1, 2026. Self-pay pricing starts at $149 per month for the lowest dose.

The payment mechanics run through a central processor operated by Humana, using the existing Low-Income Net (LI NET) infrastructure. Pharmacies collect $50 from the beneficiary and receive reimbursement at no lower than the wholesale acquisition cost (WAC) of the drug, minus the $50 copay, plus a dispensing fee. Manufacturers then remit the difference between WAC and the $245 negotiated net price to CMS. The federal government absorbs the net cost directly.

Eligibility Criteria

The Bridge uses clinical criteria that are narrower than a blanket BMI threshold:

  • BMI of 30 or higher with a diagnosis of heart failure with preserved ejection fraction, uncontrolled hypertension, or chronic kidney disease stage 3a or above
  • BMI of 27 or higher with pre-diabetes, previous myocardial infarction, previous stroke, or symptomatic peripheral artery disease

KFF estimates that approximately 14 million Medicare beneficiaries had overweight or obesity diagnoses (BMI 25+) as of 2020 claims data, though applying the Bridge-specific comorbidity criteria narrows the clinically eligible pool substantially. The gap between the 14 million top-line number and the subset meeting specific diagnostic criteria is where the utilization modeling uncertainty concentrates.

The Novel Benefit Structure: Why Standard Part D Models Break

Part D actuarial models are built around four benefit phases: deductible, initial coverage, coverage gap, and catastrophic. Every drug a beneficiary fills moves through these phases sequentially, with cost-sharing ratios, manufacturer discounts, and plan liability percentages changing at each threshold. The 2025 IRA redesign introduced a $2,000 (now $2,100 for 2026) true out-of-pocket cap, which further compressed the catastrophic phase and shifted risk to plan sponsors and reinsurers.

The Bridge bypasses all of this. According to CMS program guidance and the KFF analysis published May 9, 2026:

  • The $245 net price does not count toward the beneficiary’s gross covered prescription drug costs (GCPDC)
  • The $50 copay does not count toward the beneficiary’s true out-of-pocket costs (TrOOP)
  • The $50 copay remains the same regardless of which Part D benefit phase the beneficiary occupies
  • Low-income beneficiaries cannot access Part D Low-Income Subsidies for GLP-1s filled under the Bridge
  • Part D sponsors do not carry risk for eligible GLP-1 drugs and do not need to opt in

For the plan actuary constructing a 2027 bid, this creates a clean separation: Bridge drugs are not in the plan’s benefit design, not in the formulary, not subject to prior authorization through the plan, and not included in the risk corridor calculations. In one sense, this simplifies 2027 bid construction by removing the largest source of pharmacy trend uncertainty. In another, it creates second-order effects that are harder to model.

Second-Order Effects on Part D Bid Construction

The On Healthcare Tech analysis published April 23, 2026, captured the immediate actuarial reaction: with the BALANCE pause and Bridge extension, “CY2027 bids are simpler than they would have been, actuarial assumptions are more stable, and the premium stabilization challenges of the 2027 standalone PDP market don’t have a GLP-1 overhang.”

That assessment is directionally correct but incomplete. Several second-order modeling questions remain:

  • Comorbidity drug interaction: If a beneficiary starts a GLP-1 through the Bridge, loses weight, and subsequently reduces their use of diabetes, cardiovascular, or musculoskeletal medications that are in the Part D benefit, that reduction flows through to the plan’s drug costs. The timing and magnitude of this offset is difficult to project with less than 18 months of Bridge utilization data.
  • Adherence and persistence patterns: GLP-1 adherence rates in commercially insured populations have been volatile, with early discontinuation rates ranging from 30% to 50% within 12 months. Medicare populations may behave differently given lower copays ($50 vs. typical commercial cost sharing of $200+), older age profiles, and different comorbidity burdens.
  • Post-Bridge transition uncertainty: When the Bridge ends December 31, 2027, beneficiaries on GLP-1s face a coverage cliff unless BALANCE launches or Congress acts. Plans filing 2028 bids in mid-2027 will need to model the probability of program extension, BALANCE revival, or legislative codification, each with different plan liability assumptions.
  • Selection effects on plan choice: If beneficiaries perceive that certain plans are more likely to participate in a future BALANCE model, enrollment migration could shift the risk profile of MA-PD and standalone PDP contracts in ways that affect non-GLP-1 drug costs.

Why BALANCE Failed and the Bridge Became the Default

Understanding why the Bridge is the operative program requires understanding why BALANCE collapsed. CMS announced the BALANCE Model through the Innovation Center in December 2025, issued the Request for Applications (RFA) to Part D plan sponsors in March 2026, and set an April 20, 2026 application deadline. One day later, CMS announced the pause.

The speed of the decision was itself informative. As the On Healthcare Tech analysis noted: “When a threshold is missed by a hair, you usually get a few days of internal debate. A next-day memo means the miss was material.” The 80% NAMBA-weighted enrollment threshold specified in Section 2.3.1 of the March 2026 RFA was not met by a wide margin.

Plans had rational reasons to reject participation. Under BALANCE, they would have accepted:

  • A $50 per month copay for Enhanced Alternative plans and employer group waiver plans (EGWPs), $125 per month for other plan types
  • Zero cost-sharing in the catastrophic phase
  • Uniform formulary placement across all GLP-1 model drugs with no tiering discrimination
  • The full demand shock of opening weight management coverage to a BMI 27+ population with qualifying comorbidities

The risk corridors CMS offered were narrowed (2.5% instead of 5% at the first threshold), but only applied to plans exceeding one standard deviation above mean utilization. As the On Healthcare Tech analysis explained: “The narrowed corridor is designed to help plans with adverse selection at the margin, not plans that experienced large-scale demand shocks.”

Plans were already managing the fallout from the IRA Part D redesign, where the $2,000 out-of-pocket cap drove catastrophic phase utilization approximately 22% above actuarial base cases in the first year. Adding GLP-1 obesity coverage on top of that overshoot was a risk most sponsors calculated they could not price accurately.

The Bridge solves this by removing plan risk entirely. The federal government pays; plans process nothing. For 2027 bid construction, that is a cleaner baseline than BALANCE would have produced.

Federal Cost Projections: The $1.74 Billion per Million Users Equation

The American Action Forum (AAF) published the most granular federal cost analysis in their November 2025 insight. At the $245 negotiated price, the per-user annual federal cost is $1,743 (accounting for the $50 monthly copay offset). Every 1 million new Medicare users translates to approximately $1.74 billion in annual federal Part D spending.

AAF modeled a mid-range scenario of 2.2 million new users, implying approximately $3.8 billion in annual federal costs at the $245 price point. With a mid-year implementation for the Bridge (starting July 1, 2026), the first-year cost would be roughly half that figure.

The Congressional Budget Office took a more conservative view in its October 2024 analysis. CBO estimated 12.5 million Medicare beneficiaries would be newly eligible for anti-obesity medications but projected only 0.3 million (2%) would actually use them in Year 1, with a ten-year net cost of approximately $35 billion from 2026 through 2034. CBO’s per-user cost estimate started at roughly $5,600 in 2026, declining to $4,300 by 2034 as IRA price negotiation provisions kick in (CBO anticipates 32% drug price reductions after 2027).

Source Eligible Population Projected Users (Year 1) 10-Year Net Federal Cost Healthcare Offset Ratio
CBO (Oct 2024) 12.5 million 0.3 million (2%) ~$35 billion ~8% ($3B of $38B)
JAMA/Hwang et al. (Apr 2025) 30 million cumulative 3 million (base case) $47.7 billion net 27.6% ($18.2B of $65.9B)
AAF (Nov 2025) ~54.8M Part D enrollees 2.2 million (mid-range) ~$3.8B/year at steady state Not modeled

The range between CBO’s $35 billion and the JAMA microsimulation’s $47.7 billion reflects fundamentally different assumptions about uptake rates, adherence persistence, and drug pricing trajectories. CBO assumes 2% first-year uptake with gradual ramp; Hwang et al. model 10% uptake with 40% long-term adherence. The Bridge’s $50 copay is substantially lower than any scenario these models assumed (CBO modeled standard Part D cost sharing; Hwang et al. used $8,412 per year net cost for semaglutide), which means actual utilization could exceed both projections.

Uptake Modeling: The $50 Copay as a Demand Accelerant

The $50 monthly copay represents a 96% reduction from Wegovy’s pre-deal list price of approximately $1,350 and an 80% reduction from the $245 negotiated net price. KFF survey data shows that approximately half of current GLP-1 users describe these medications as “difficult to afford,” with a quarter calling them “very difficult.” Removing the affordability barrier for the Medicare population, which has both higher obesity prevalence and lower disposable income than the commercially insured population, could produce a utilization curve steeper than any existing model anticipates.

Three variables drive the uptake modeling:

Eligible pool size: The 14 million beneficiaries with BMI 25+ is the upper bound. Applying the Bridge’s specific comorbidity criteria (heart failure with preserved ejection fraction, uncontrolled hypertension, CKD stage 3a+, pre-diabetes, prior MI, prior stroke, or symptomatic PAD) narrows the pool. The overlap between obesity and these conditions is substantial in the Medicare population but not universal. A reasonable first approximation is 6 to 9 million clinically eligible beneficiaries, though claims-level analysis would be needed to refine this estimate.

Prescriber adoption rate: Medicare beneficiaries access GLP-1s through their physicians, and prescribing behavior varies significantly by specialty, geography, and payer mix. Primary care physicians, endocrinologists, and cardiologists are the primary prescribers, but the Bridge’s clinical criteria (especially the cardiovascular and renal indications) may expand the prescriber base beyond traditional obesity medicine specialists.

Adherence persistence: In commercially insured populations, 12-month persistence rates for GLP-1s have ranged from 50% to 70%, with significant variation by cost-sharing level. The $50 flat copay eliminates the cost-driven discontinuation that accounts for a substantial share of commercial attrition. However, side effects (nausea, gastrointestinal symptoms) remain a factor independent of cost, and the Medicare population’s polypharmacy burden adds drug interaction considerations.

Milliman’s Q4 2025 MedIntel report documented that combined GLP-1 costs reached $66.13 PMPM, a 92% increase from Q1 2024. GLP-1s are now the single largest drug class in Part D by total cost. Non-low-income average 2025 PMPM reached $381, with Q4 2025 at $427. The 2024-to-2025 annual growth rate of 33% in gross cost PMPM was already running well above trend assumptions built into most 2025 bids.

For 2027 projections, the Milliman data highlights a baseline selection problem: using average 2025 PMPM ($381) with a 10% annual trend produces a projected 2027 PMPM of $461, while using the Q4 2025 run rate ($427) produces $499. That 8%+ gap between methodologies illustrates why GLP-1 trend projection remains one of the highest-variance assumptions in Part D actuarial work.

The Comorbidity Offset Hypothesis: Does Weight Loss Pay for Itself?

The economic case for Medicare GLP-1 coverage rests partly on the premise that weight loss reduces downstream healthcare spending on diabetes, cardiovascular disease, joint replacements, and other obesity-related conditions. The clinical evidence for weight loss as a health intervention is strong. The fiscal evidence for short-term cost offsets is not.

The JAMA Health Forum microsimulation by Hwang et al., published April 25, 2025, is the most comprehensive actuarial projection. Over a 10-year horizon (2026-2035) with a base-case assumption of 3 million treated beneficiaries, the model projects $65.9 billion in total Medicare drug costs and $18.2 billion in healthcare cost offsets, for a 27.6% offset ratio. Net increased spending: $47.7 billion.

The sensitivity analysis reveals the range of uncertainty:

  • Conservative scenario (5% uptake, 30% discount, 20% adherence): $8.0 billion net cost
  • Base case (10% uptake, 40% adherence): $47.7 billion net cost
  • High scenario (20% uptake, 10% discount, 60% adherence): $131.6 billion net cost

CBO’s offset estimates are far more conservative. In Year 1, CBO projects only $50 million in health savings against billions in drug spending, roughly $50 per user per year. By 2034, the per-user offset rises to approximately $650. CBO projects total health savings of just $3 billion against $38 billion in drug costs over 10 years, an 8% offset ratio. The second decade (2035-2044) is where CBO expects offsets to compound meaningfully, as the cumulative metabolic benefits of sustained weight loss work through the chronic disease pipeline.

Research from Duke’s Sanford School of Public Policy offers a blunt summary: “GLP-1 drugs worked as advertised for metabolic health, but they did not reduce broader healthcare use in the near term.” GLP-1s were found to be cost-effective for diabetes patients but “not cost-effective at current prices” for obesity-only patients.

For the actuary evaluating budget neutrality, the timeline mismatch is the core problem. Drug costs are immediate and certain. Comorbidity offsets are delayed and probabilistic. The Bridge’s 18-month window (July 2026 to December 2027) is too short to generate meaningful offset data. Any comorbidity savings that materialize will accrue over 5 to 15 years, well beyond the Bridge’s demonstration period and beyond the typical Part D bid cycle.

Milliman Data: GLP-1 Costs Already Dominating Part D Spend

The Milliman MedIntel Part D Trend Insights report for Q4 2025, published March 31, 2026, provides the baseline data against which Bridge utilization will be measured. The headline numbers underscore why the BALANCE model participation threshold was unachievable:

  • GLP-1s are the single largest drug class in Part D by total cost, at $66.13 PMPM in Q4 2025
  • Specialty drugs now comprise 45% of total non-low-income costs, up from 29% in Q4 2023
  • Non-low-income specialty costs increased 127% over two years (Q4 2023 to Q4 2025), from $84 to $190 PMPM
  • The overall non-low-income annual growth rate of 33% in 2024-2025 was driven disproportionately by GLP-1 utilization growth for weight-loss indications (Zepbound, Wegovy)

Milliman explicitly flagged the Bridge program as a utilization accelerant: “Utilization for weight-loss indications (Zepbound, Wegovy) is likely to grow even more rapidly in the second half of 2026 during the temporary Bridge model, as well as in 2027 if the voluntary BALANCE model is finalized.”

The critical distinction for plan actuaries: because the Bridge operates outside the Part D benefit, this GLP-1 utilization growth will not directly affect plan-level PMPM metrics. The $66.13 PMPM figure includes GLP-1 utilization for diabetes (which remains in the Part D benefit) but will not reflect Bridge-channeled obesity utilization. Plans should see their reported GLP-1 PMPM stabilize or potentially decline for obesity indications during the Bridge period, while the federal government’s direct spend ramps up on a separate ledger.

The TrumpRx Pricing Architecture

The Bridge’s $50 copay rests on the manufacturer pricing agreements negotiated in November 2025 between the Trump administration and both Novo Nordisk and Eli Lilly. These most-favored-nation (MFN) deals established $245 per 30-day supply as the Medicare and Medicaid net price for currently marketed GLP-1 injectables. The deals included tariff relief and expedited regulatory incentives for forthcoming oral formulations, providing a commercial quid pro quo for the price concessions.

The pricing hierarchy that emerged:

Channel Wegovy (Novo) Zepbound (Lilly) Foundayo (Lilly)
Pre-deal list price ~$1,350/mo >$1,080/mo N/A (launched at deal prices)
TrumpRx direct-to-consumer $350/mo $346/mo avg $149-$349/mo
Medicare/Medicaid net $245/mo $245/mo $245/mo
Medicare Bridge copay $50/mo $50/mo $50/mo

For actuaries modeling long-term cost trajectories, the CBO assumption of 32% drug price reductions after 2027 from IRA negotiation provisions is a key variable. If negotiated prices fall substantially below $245, the per-user federal cost drops proportionally, but utilization may accelerate in response to lower perceived cost barriers in successor programs. The net spending trajectory depends on the price-utilization elasticity, and for a drug class treating a chronic condition affecting nearly 40% of the adult population, that elasticity is likely to be high.

Medicaid Context: The Parallel Coverage Expansion

The Bridge does not exist in isolation. The BALANCE model’s Medicaid component launched on May 1, 2026, with state applications accepted through January 1, 2027. As of January 2026, 13 state Medicaid programs covered GLP-1s for obesity treatment: Delaware, Kansas, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, North Carolina, Rhode Island, Tennessee, Utah, Virginia, and Wisconsin. Four states eliminated coverage between October 2025 and January 2026 (California, New Hampshire, Pennsylvania, South Carolina), reflecting state budget pressures.

KFF data on Medicaid GLP-1 spending reveals the trajectory. Gross spending grew from approximately $1 billion in 2019 to nearly $9 billion in 2024, a nine-fold increase. Prescription volume increased seven-fold over the same period, from roughly 1 million to over 8 million annual prescriptions. GLP-1s represent approximately 1% of all Medicaid prescriptions but account for over 8% of all Medicaid prescription drug spending before rebates.

The Medicaid trajectory is relevant to Medicare actuaries because it provides a partial utilization analog. Nearly 40% of adults with Medicaid have obesity, similar to the Medicare population. State-level Medicaid GLP-1 utilization data, where available, can serve as an imperfect calibration point for Bridge uptake modeling, adjusted for the different copay structure ($50 flat vs. variable Medicaid cost sharing), eligibility criteria, and population demographics.

Why This Matters for Actuaries

Part D plan actuaries filing 2027 bids face a simplified GLP-1 assumption set for the bid year (Bridge absorbs the obesity risk) but an unresolvable 2028 cliff. If the Bridge expires as scheduled on December 31, 2027, and BALANCE has not been revived, 2028 bids due in mid-2027 must assume either zero GLP-1 obesity coverage (beneficiary cost sharing reverts to standard Part D) or model the probability of program extension. The actuarial guidance for this type of binary scenario analysis is limited, and ASOP No. 25 credibility standards provide little help when the underlying event is regulatory rather than statistical.

Health plan pricing actuaries in ACA and employer-sponsored markets should track Bridge utilization data as a leading indicator of GLP-1 demand elasticity at low copays. The $50 copay is below even most commercial plans’ GLP-1 cost sharing, and the GLP-1 credibility problem in ACA 2027 rate filings will be further complicated by the potential for Medicare utilization data to be cited as an analog for commercial trend.

Stop-loss actuaries modeling GLP-1 exposure for self-funded plans should note that the Bridge does not apply to employer-sponsored coverage. The stop-loss carrier repricing of GLP-1 rules at 2026 renewals will continue independently, and the bifurcation between Medicare (federal subsidy) and commercial (plan-level risk) approaches to GLP-1 coverage creates different cost trajectories for the two populations. If the Bridge succeeds in demonstrating utilization and outcome data, employer health plans may face pressure to match coverage levels, with significant implications for specific deductible and aggregate attachment point adequacy.

Government and consulting actuaries advising CMS, state Medicaid agencies, and pharmaceutical manufacturers face the question of whether the Bridge model can scale. The 18-month demonstration window is too short to produce statistically credible comorbidity offset data, too short for the clinical benefits of weight loss to fully manifest in claims data, and potentially too short for political consensus on permanent coverage. The $500 billion Part D spending gap documented by CBO already reflects a program where costs have consistently exceeded projections. Adding a new multi-billion-dollar benefit, even one financed outside the Part D framework, raises the question of whether the current CBO scoring methodology can adequately capture the fiscal dynamics of demonstration-authority programs that bypass the standard legislative and bidding process.

The Bridge effectively creates a federal single-payer carve-out for GLP-1 obesity drugs within the otherwise market-based Part D system. If the demonstration succeeds and becomes permanent, it fundamentally changes the Part D risk-sharing model by establishing a precedent for removing high-cost drug classes from plan-level risk and financing them directly through federal appropriations. The actuarial implications extend well beyond GLP-1s to any future drug class where plan sponsors prove unwilling to accept the utilization risk at a price point the federal government negotiates.

Further Reading

Sources