Delaware’s state health insurance plan is starting preliminary trend predictions for fiscal year 25, — starting July 1, 2024 — which includes a 272% increase in spending on weight loss drugs.
FY24 was the first year Delaware’s Group Health Insurance Plan (GHIP) began covering GLP-1s for weight loss — with brand names like Ozempic and Trulicity — and by the end of the year, the state had paid over $14.1 million on the drugs.
That’s $12 million more than the state’s pharmacy benefit manager projected, and now the state is working on tackling projections for the current fiscal year and beyond.
The increased spending was fueled by a month-over-month average increase of 18% in GLP-1 claims in FY24, but Willis Towers Watson (WTW) Consultant Brian Stitzel is projecting FY25 claims will start to plateau and is asking the state to approve an average claims increase of only 4%.
“Since we provide long term projections on an ongoing basis, it's also seeking approval of, for now, what these future trend assumptions are — meaning the ratcheting down ultimately of the GLP-1 increases year-over-year into FY28," Stitzel said.
July 2024 — the beginning of this fiscal year — saw a 21% increase in weight loss drug claims compared to June 2024, but WTW is projecting the month-over-month increases will not exceed that number for the remainder of the fiscal year.
In fact, Stitzel says he expects the average increase in new claims to reach 2% by January 2025 and that increase rate will hold steady through the summer — resulting in the projected overall average increase of 4%.
Despite the moderate predicted increase in claims, consultants are expecting the state to spend close to $53 million on GLP-1s this fiscal year, which is close to 4 times more than last year.
WTW also projects the state will see an overall increase of 29% in pharmacy spend this fiscal year, 16% in FY26, 11% in FY27 and down to 9% by FY28.
Additionally, the consultant agency is projecting more favorable outcomes for the GHIP's cash flow this year, after needing a $7.3 million loan from the Office of Management and Budget to make up for last year's deficit.
“Over the course of the year, starting in November ultimately, where we're expecting a positive cash balance of more than $60 million, and then a little bit more than $34 million after our 2% minimum reserve that we've got built into our forecast assumptions," Stitzel explained.
The uptick in cash is largely due to the 27% health insurance premium hike that started last month, and smaller premium increases will likely be needed in the years to come.
While WTW, does not project the need for a premium increase next fiscal year, they are recommending an 8.8% hike in FY27 and a 9.5% hike in FY28.
The full State Employee Benefits Committee will discuss the trend predictions at Monday’s meeting but is expected to vote on them for approval in September.
