As prescription costs for Ozempic and Wegovy spiral, U.S. towns and cities face impossible choices between essential infrastructure and employee healthcare coverage.
A quiet fiscal crisis is unfolding in municipal governments across the United States, driven not by rising interest rates or crumbling infrastructure, but by a new class of blockbuster medications. GLP-1 weight-loss drugs, including Novo Nordisk’s Ozempic and Wegovy, have triggered a budgetary shock for towns and cities that originally included them in employee health plans with high hopes for long-term savings. Instead, the costs have snowballed, forcing officials to raid savings accounts, cut school budgets, and, in some cases, strip coverage entirely.
The Financial Shockwave
The scale of the problem is staggering. In Belchertown, Massachusetts, a town of 15,000, officials were preparing to fund road repairs and building upgrades when they received a surprise invoice of $911,000 from the Hampshire County Group Insurance Trust. The trust, which manages healthcare for dozens of New England entities, was nearing insolvency as weight-loss drug costs consumed its reserves.
“The universal reaction was shock,” said Lesa Lessard Pearson, chair of the Belchertown Select Board. The town was forced to dip into long-term savings and make departmental cuts, including reductions to the school budget. “It felt like a betrayal,” she said.
Similar stories are emerging nationwide. In North Attleborough, Massachusetts, town manager Michael Borg discovered that prescriptions for weight-loss drugs were the primary driver behind a $1.8 million healthcare deficit. The town, already strained by $1 million in snowplowing expenses after a brutal winter, found its financial flexibility evaporated. “If anything else happens, I don’t have any more options,” Borg said, noting that bridge repairs and police hiring had to be put on hold.
In Fort Worth, Texas, the city paid $5 million in just six months for two weight-loss medications for employees. Facing a $50 million shortfall, the city has proposed shifting the entire cost to employees. Meanwhile, in Montague, Massachusetts, a 53% year-over-year rise in healthcare costs, driven largely by these drugs, forced the school district to cut five jobs and freeze hiring.
The Data Gap
The financial strain is disproportionate to the number of users. In the first nine months of 2025, weight-loss drugs accounted for 30% of the Hampshire County Group Insurance Trust’s pharmacy spending but represented fewer than 3% of its membership.
Employers initially followed the lead of major corporations in covering these drugs, expecting that improving employee health would reduce emergency room visits and lower long-term costs. However, the reality has been more complex. A working paper published earlier this year by the National Bureau of Economic Research suggests that while the drugs offer health benefits, long-term savings are often offset by the need for frequent monitoring and management of side effects.
Novo Nordisk counters that peer-reviewed studies indicate the treatments improve long-term health outcomes and generate system-wide savings. “It could take years for employers to determine how the drugs are affecting their healthcare systems,” the article notes, yet towns must make coverage decisions immediately.
The Policy Dilemma
Local governments are now divided on how to proceed. Some are moving swiftly to eliminate coverage. The Hampshire County trust voted to strip coverage for weight loss, leading a handful of towns to flee the group.
Others are hesitant to cut coverage, fearing it will harm vulnerable employees. In Boston, unions successfully pushed back against proposed restrictions, resulting in a compromise that limits eligibility rather than eliminating coverage. In Delaware, public employees argued emotionally that the medication was essential for enabling healthy habits, not replacing them.
In Cumberland County, North Carolina, officials are taking a wait-and-see approach. With some of the state’s highest rates of diabetes and obesity, County Board Chairman Kirk deViere warned that canceling coverage would be “shortsighted” without more data on long-term health outcomes.
Legal challenges are also complicating the landscape. In Washington, a public employee denied coverage sued the state, arguing that obesity constitutes a disability. While a lower court dismissed the suit, an appeals court recently revived the case, potentially setting a precedent that could restrict how municipalities manage their benefit plans.
A Broken System?
For many town administrators, the situation highlights a deeper fracture in the U.S. healthcare system. Walter Ramsey, the administrator of Montague, summarized the frustration felt by many: “The healthcare system is just broken.”
As fiscal years end, more cities and towns are expected to follow the path of Belchertown and North Attleborough, balancing the immediate need to keep roads paved and schools open against the ethical and health implications of denying employees access to life-changing medication. The debate, once confined to medical journals, has now become a central issue in city council chambers and school committees across the country.
