Newsletter · · Ashutosh Agarwal

Medicare Opens a Side Door to Weight Loss Drugs as PBM Reform Advances - Healthcare Policy: Drug Pricing, IRA & Managed Care - Week of August 1, 2026

A synthesis of what healthcare policy and payer podcasts said for the week of July 25 to August 1, 2026, covering Humana's 600,000 member Medicare Advantage exit, the new BRIDGE pilot that covers GLP-1s for weight loss, a PBM reform bill clearing committee 40 to 2, and the first Medicaid work-requirement terminations.

Healthcare Policy: Drug Pricing, IRA & Managed Care

Week of July 25 to August 1, 2026: Humana Cuts 600K, GLP-1s Hit Medicare, PBM Reform Advances

Intro

This was one of those weeks where the policy plumbing that usually hums quietly in the background started making a lot of noise. Health insurers spent their earnings calls describing a full-scale retreat from markets they spent a decade fighting to win. Congress moved a serious drug-middleman reform bill for the first time in years. Medicare quietly opened the door to covering weight-loss drugs, through a side entrance, because the front door is legally locked. And a small state in the middle of the country became the first place in America where people can actually lose their Medicaid for not proving they work.

The through-line: after years of chasing growth, everyone who pays for healthcare, insurers, the government, employers, is now chasing margin and cutting exposure. The people on the other side of that math are patients and, increasingly, hospitals.

TL;DR

  • The big managed-care story is contraction. Humana told investors it will exit enough Medicare Advantage markets to shed about 600,000 members next year in pursuit of its 2028 margin targets; UnitedHealth is dropping "millions" this year; Elevance already did its cull. This is a coordinated, multi-year margin rebuild, not a one-off.
  • Weight-loss drugs are now a Medicare line item, sort of. A new pilot called BRIDGE will cover GLP-1s for weight loss at a $50-a-month copay, the first time Medicare has done this, but it's an 18-month experiment run around a congressional ban, administered by Humana, and no one knows what it costs.
  • The middleman reform many thought was dead is moving. A bill to rein in pharmacy benefit managers (the companies that sit between drugmakers and your pharmacy) cleared a key House committee 40-to-2, with a penalty for violations jacked up from $10,000 to $1 million.

What's new

1. Humana is walking away from 600,000 Medicare Advantage members. On its earnings call, Humana's chief financial officer, Celeste Mellett, said the insurer will exit more Medicare Advantage markets for 2027 as it pushes toward its 2028 margin goals, and that those exits will "impact about 600,000 members." Medicare Advantage (MA) is the privatized version of Medicare, where the government pays a private insurer a fixed amount per enrollee, so if your costs run above that payment, you lose money on that member. Mellett framed the cuts as surgical: the company will "use plan exits to prioritize higher performing plans, including those with greater value-based care penetration," and try to win back as many members as it can later. This was dissected in plain terms on The Seven Figures Or Bust Podcast (Episode 257, July 31), a show run by Medicare insurance agents who sell these plans for a living, very much operators on the distribution side. Their read: Humana loaded up on members during the last two growth-at-all-costs sign-up seasons and now has to shed the unprofitable ones to survive. Why it matters: this is the clearest single number yet on how deep the MA retrenchment goes at one carrier, straight from the CFO.

2. Medicare will cover weight-loss drugs, through a legal side door. Dr. Robert Pearl, who ran the Permanente Medical Group (the nation's largest physician group) for 18 years and now teaches at Stanford, laid out the new "BRIDGE" pilot on the Fixing Healthcare Podcast (MTT #109, July 29). For the first time, Medicare will cover GLP-1 drugs (the Ozempic/Wegovy/Zepbound family) purely for weight loss, at a copay of "only $50 a month," roughly "80% less" than what an uninsured person pays under the recent Trump-administration deal with manufacturers. The catch, in Pearl's words: Congress has banned Medicare from covering weight-loss-only drugs, so CMS is running BRIDGE as a "pilot program" that "isn't guaranteed to last after 18 months" to get around that ban. The government will buy the drugs for "around $245 a month," and, notably, the program "will be administered by Humana." Because it sits outside Part D (the normal Medicare drug benefit), the roughly $600 a year enrollees pay won't count toward their drug-cost cap. Pearl estimates about 30 million of Medicare's 70 million members could qualify, though 16 million already get these drugs through Part D for diabetes or heart disease. Why it matters: it's a genuine policy first with enormous cost tails, and the fact that it had to be structured as an end-run around Congress tells you how contested GLP-1 coverage still is.

3. PBM reform cleared a committee, and got tougher on the way through. The Pharmacy Podcast Network episode "Pharmacists Fight Back: Federal PBM Reform Advances" (July 31) featured pharmacy advocates who worked the bill directly, insider operators in the independent-pharmacy world. Pharmacy benefit managers (PBMs) are the powerful middlemen, owned by the big insurers, that decide which drugs your plan covers and how much pharmacies get paid. The Pharmacists Fight Back Act (HR 6610), which targets PBMs inside the federal employee health program, passed a House Oversight Committee markup "40 to two." A "markup" is the step where a committee formally approves a bill so it can move toward the floor, and the advocates called it "very, very rare" for a bill to get this far. Two details stood out: the penalty for a PBM violation was raised from "$10,000... to one million dollars" per violation, while the one concession was that the bill "doesn't go into effect for two years versus one." The advocates credited Oversight Chairman James Comer of Kentucky as the key champion. The bill goes after PBM reimbursement, patient "steering," the practice of PBMs marking up drugs at pharmacies they own, and retroactive fees. Why it matters: the market has largely written off federal PBM reform; a 40-2 committee vote with a 100x bigger penalty is a real signal it's alive.

4. The "surprise billing" fix has backfired on insurers, and the government now agrees. Jakob Emerson, who covers insurers for Becker's, walked through fresh CMS data on the Becker's Healthcare Podcast ("No Surprises Act Costs, Price Transparency, and the Latest Payer Policy Shifts," July 24). The federal arbitration system set up to resolve out-of-network billing fights has blown past everyone's expectations: costs "reached almost $15 billion in costs in 2025 alone... compared to $4 billion in 2024." UnitedHealthcare is now telling investors the whole process is "no longer working" and driving up commercial costs. A CMS spokesperson told the Wall Street Journal the system "is being gamed to get higher prices, and CMS is actively working to clean it up," the government siding with insurers. But Emerson's nuance is important: the courts are largely siding against the insurers, and the insurers "lobbied for this law" in the first place. Why it matters: rulemaking to overhaul this arbitration process looks likely over the next year, and it flows straight through insurers' and providers' commercial economics.

5. Congress is coming for insurers' data advantage. In the same Becker's conversation, Emerson flagged that big healthcare packages advanced out of committee that would codify hospital and payer price-transparency rules, and, in the Senate version, give employers, third-party administrators, and PBMs legal access to "their own claims data" and "reimbursement formulas around prescription drugs." His framing: "the negotiating power of the payers just keeps getting worse over time," and Congress now wants to go after "the entire infrastructure of how the insurer and claims and pricing structure of the healthcare system is built." Why it matters: claims data is the insurers' competitive moat; forcing it open changes the leverage in every hospital-insurer and employer-PBM negotiation.

The debate: are GLP-1s a cost bomb or a cost cure?

This is the one genuine two-sided argument the podcasts built out this week, and it splits cleanly.

The "cost bomb, at least for now" side was made most concretely by "Phil," a healthcare-cost analyst on PwC's Next in Health ("Behind the Numbers 2027," July 30). His point is arithmetic: GLP-1 prices "have come down upwards of 60, 70 percent," but "volume has skyrocketed and could further 2x, 3x and 4x from there," so "there simply isn't enough price left to offset." Employers are paying "$30, 40, 50 dollars per member per month for GLP-1 coverage alone" and can't say when, or whether, the promised savings from healthier employees show up. His prediction for the coming year: a "topsy-turvy market" where "a pretty good amount" of employers "will drop or more significantly restrict coverage for weight loss while covering for diabetes."

Dr. Robert Pearl, on Fixing Healthcare, put hard numbers on the same skepticism: for GLP-1s to pay for themselves in better health, the monthly cost "would need to be no more than maybe $200 a month," and "the lowest retail prices for the brand-name drugs, they're double that." His conclusion is blunt: rising GLP-1 prescriptions will "increase healthcare costs, not lower them in the future." He also notes drug spending is now the fastest-growing category of medical cost, "up 11%," inside a total US medical bill of "$5.7 trillion last year."

The "give it time / competition is working" side came from the investor hosts on Dividend Talk (Episode 304, July 25), retail-investor pundits, not operators. Their observation: because Novo Nordisk and Eli Lilly now compete head-to-head (and are even suing each other over allegedly misleading ads comparing doses), prices have collapsed from around "$1,000" to "$150 or $200," which is good for patients and expands the market. Phil at PwC conceded the same long-run hope, comparing GLP-1s to statins, once dismissed as not worth paying for, now standard first-line care: "GLP-1s may get there... but it's going to take time to develop the evidence base."

Where they agree: nobody has the data yet to prove GLP-1s save money, and until they do, the near-term hit lands on whoever writes the check: employers, insurers, and now Medicare via the BRIDGE pilot.

The names in play

Even in a policy-heavy week, several companies got named specifically through a managed-care lens, mostly by Jakob Emerson on the Becker's Healthcare Podcast ("Jakob Emerson on ACA Subsidies, Medicare Advantage and What Q2 Earnings Reveal," July 29). Emerson is a payer journalist, a pundit/analyst rather than an operator, but he was reporting directly off this week's earnings calls.

  • Humana (HUM): Emerson said its "individual Medicare Advantage pre-tax margin should double this year, excluding STARS headwinds," the "STARS" reference being the quality-rating system that, when scores drop, cuts a plan's bonus payments, and which he called "a bit of a wild card right now across the entire industry." Paired with the 600,000-member exit, Humana is the clearest example of margin-over-growth.
  • UnitedHealth (UNH) and Elevance (ELV): "United is dropping millions of members this year," while "Elevance did it last year." Same playbook: leave markets or drop broader-network PPO plans and push members into cheaper HMO and narrow networks to shed expensive membership.
  • Centene (CNC): the turnaround story. Emerson: Centene went from "over a $250 million loss in the same quarter last year" to "over a billion dollars in profit this year." Its actuaries saw the expiring Affordable Care Act subsidies coming, "refiled quickly with the states" at higher premiums, and lost roughly 2 million exchange members, but raised its 2026 marketplace margin. A loss of business that improved profitability.
  • HCA (HCA) and Tenet (THC): on the hospital side, Emerson pegged the ACA hit to HCA's payer mix at "somewhere between a billion and 1.2 billion over the course of this entire year," up from an earlier "600 to 900 million," while noting HCA still guides to $15.4 to $16.1 billion in adjusted profit, so "it is also hard to be too empathetic." For Tenet, exchange patients are "only about 5.5% of the system's overall revenue," which is why its stock rose on the print.

Operator voice worth separating out: on The Seven Figures Or Bust Podcast, the agents relayed Humana CFO Celeste Mellett's own words from the call. That's insider commentary (the CFO) surfaced by distribution operators (the agents), distinct from Emerson's outside analysis, though the two corroborate each other on the 600,000 figure.

Read-throughs

  • PBMs (CVS/Caremark, Cigna/Express Scripts, UnitedHealth/Optum Rx): two pincers this week. HR 6610 advancing (Pharmacy Podcast Network) plus the Senate transparency bill forcing disclosure of "PBM drug reimbursement" formulas (Becker's, July 24). And on the Becker's Payer Issues Podcast (July 24), Blue Shield of California executive Susan Mullaney described building an in-house alternative to "the three PBMs that handle 85% of drug distribution," claiming "$33 per script" savings for members. The pressure on the traditional spread-based PBM model is broadening from politics into competition.
  • Biosimilars and generics: on Business Group on Health ("The Real Story Behind Today's Drug Price Headlines," July 27), law professor and former Biden-administration IRA implementer Rachel Sachs explained why cheaper copycats don't always arrive on schedule: "patent thickets" (she cited Humira, protected by "well over 100 patents") and courtroom fights over "skinny labeling." Her one-liner for investors: generics can cut small-molecule prices "80 to 90 percent or more," but biosimilars produce "smaller discounts" and stall unless insurers cover and doctors prescribe them. She also confirmed "PBM reform recently became law" as one of several bipartisan efforts.
  • Ex-US and pharma pricing (Novo Nordisk, Eli Lilly): the Dividend Talk hosts noted Novo is "aggressively... undercutting the prices to win market share" under its deal with the Trump administration and wondered aloud "what this means for their margins and profits," the read-through being that the US drug-pricing détente is showing up as a margin question, not just a volume one, for the GLP-1 duopoly.
  • Medicaid and exchange insurers (Centene, Molina, Elevance): Tradeoffs ("Meet the Man Launching Trump's Medicaid Work Requirements Months Early," July 30) followed Nebraska, the first state to actually enforce Medicaid work requirements. Nationally, "about 5 million Americans are expected to lose Medicaid" over the coming years, with "20 million people across 44 states" subject to the rules. In Nebraska alone, consultancy Manatt estimates "up to 30,000" could lose coverage by 2028. For insurers that run managed-Medicaid plans, that's a direct membership headwind layered on top of the ACA-subsidy exodus.
  • Optum-style services and oncology: on the Becker's Healthcare Podcast ("The Future of Oncology Strategy, AI and CMS Reform," July 24), Bridge Oncology co-founder Jordan Johnson called CMS's 2027 proposed rules "the biggest transformation in healthcare in decades" and flagged the march toward "site neutrality," paying the same rate regardless of whether care happens in a hospital-owned building or a doctor's office. He also warned that 340B drug-pricing reform threatens the "pharmacy margin" hospitals have long used to "subsidize other service lines," pushing care (infusion, imaging, radiation) out of hospitals toward lower-cost settings.
  • GLP-1 exposure (insurers and employers): the BRIDGE pilot puts a new, uncapped cost onto Medicare, and onto Humana as administrator, while PwC's Phil expects many commercial employers to restrict weight-loss coverage. Same molecule, opposite direction depending on who's paying.

What changed

  • Part D subsidy is ending a year early. The Seven Figures hosts clarified a story the mainstream press mangled: it is not "Part D ending." It's the Biden-era Part D Premium Stabilization Demonstration, a temporary subsidy that helped standalone drug plans absorb the IRA's new $2,000 out-of-pocket cap, being sunset in 2027 instead of running its full third year. The subsidy shrank from "$15" per plan to "$10," cost taxpayers "$9.8 billion" over two years ("$3.6 billion in 2026 alone"), and its expiration could nudge 2027 drug-plan premiums up or thin out drug formularies. Small dollars industry-wide, but a real signal on where the administration wants premium support to not go.
  • The government's posture on insurers flipped. After early rhetoric about getting tough on Medicare Advantage, this week CMS delivered a favorable MA rate notice, sided with insurers on surprise-billing arbitration, and rolled out the BRIDGE pilot, a distinctly payer-friendlier stance than the market expected six months ago (per Becker's, July 24).