Boston Mayor Michelle Wu said her administration had reached an agreement with the City Hall union to limit coverage of the GLP-1 drug for weight loss that would save the city about $10.6 million and reduce “skyrocketing” health care costs.
Wu and the Public Employees Committee, which bids for health insurance benefits on behalf of the Boston City union, jointly announced the agreement Wednesday, saying the city’s proposal to implement a drug use management system like Ozempic and Wegovy was unanimously approved by the PEC.
“Amid one of the most challenging budget environments in recent years, this agreement illustrates the strength of our labor-management partnership and what’s possible when our city and unions work together,” Wu and PEC Chairwoman Elissa Cadillic said in a joint statement.
“Together, we are taking steps to responsibly manage rising costs while protecting the health care coverage our workforce depends on, and the high-quality core city services our residents deserve.”
Utilization management will now require city employees to obtain prior authorization to receive health insurance for the GLP-1 drug, which treats Type 2 diabetes and obesity. The drug is increasingly used as an appetite suppressant by people who want to lose weight.
The mayor’s office said in an announcement Wednesday that the city’s health care costs are expected to rise significantly next fiscal year, driven in part by increased use of GLP-1 drugs for weight loss.
Boston Chief Financial Officer Ashley Groffenberger said last week that if the city does not receive approval from the PEC to implement a utilization system to limit the use of GLP-1 drugs for weight loss, “health insurance rates for non-Medicare plans will increase by 22.6% from FY26.”
Groffenberger said the increase would be the “highest multi-year premium increase in recent history,” and that the rate hike would be “deeply felt by the city and our workforce.” He described health care costs as “skyrocketing.”
Exacerbating the city’s budget crunch is “inflationary pressures and significant cost increases heading into FY27” – especially health care costs – at a time when city revenues are projected to grow only by 1.5% to 2.5% over FY26, the mayor’s office said.
The city’s budget crunch has prompted the Wu administration to freeze some spending and delay hiring for the remainder of this fiscal year, according to a city memo obtained by the Herald last week.
The PEC initially voted to reject the city’s use management proposal on March 9.
Cadillic expressed skepticism that the system would result in significant cost savings to the city and concerns that prior authorization requirements would be extended to other non-specialty medications beyond GLP-1 drugs.
He also said it was atypical for unions to be asked to negotiate health costs in the middle of the agreement, which expires on June 30, 2027.
Cadillic has asked for a counter offer to the city last week which states that the PEC will agree to the management of the use of GLP-1 drugs, if the implementation is delayed for six months, from July 1 of this year to January 1, 2027, halfway through the fiscal year. PEC is also seeking a one-year contract extension for health costs.
Some unions are not on board with the “hard line” that the PEC appears to be taking with the mayor, however, and are urging the PEC to take a city deal.
Thomas McKeever, SEIU Local 888 president, said bluntly that the PEC does not speak for the entire union in taking a “hard line” against the mayor on this issue, despite having a vote.
“If we don’t have that discussion, then most of the unions in the city will face layoffs, and frankly that will affect my members, because they are the lowest wage workers in the city,” McKeever told the Herald last week.
Speaking specifically to the March 9 PEC vote before the counter offer was made, McKeever said, “We are not happy with the decision of a small group of leaders in the city, as it relates to the PEC.”
“They’re taking a hard line against the mayor and refusing to open the contract,” McKeever said. “I’m saying that we need to open the contract and resume negotiations that will keep our members on the job.”
A city spokeswoman said usage management would be implemented by July 1 under an agreement reached this week, as proposed by the Wu administration.
The mayor’s move comes after the Commonwealth Group Insurance Commission voted to eliminate GLP-1 coverage for state workers last month, a line the Wu administration said it did not want to take and sought to limit coverage with prior authorization.
The city anticipates the system will save the city roughly $10.6 million. The city’s employer health insurance costs cover about 55,000 workers, their families, and retirees.
The mayor’s office said the city is “committed to reinvesting the resulting employer savings to minimize the impact of targeted reductions driven by overall budget challenges facing the city in the coming fiscal year.”
Wu administration officials had previously directed department heads to cut their budgets by 2% for the next fiscal year, and said the city would look to cut more costs as it prepares the FY27 budget.
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