Weight-Loss Drugs Are Gobbling Up Small Town Budgets
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What is the main topic discussed in this episode?
Hey, it's Ryan. Our colleague Imani Moise is here to guest host today's episode. Here it is. About an hour outside of Boston, there's a picturesque small town surrounded by forested hills called Belchertown. That's where Lisa Lessard Pearson lives.
My spouse and I affectionately call it Belcher Town or B-Town to get around the Belcher Town connotations.
What unexpected financial burden did Belchertown face?
Lisa sits on something called the Select Board. It's a small-town version of a city council that serves Belcher Town's 15,000 people. And after years of saving up reserves, the town had finally scraped together enough money for a few key infrastructure projects, like repairing the roofs and the lights at the schools and updating the senior center.
These are basics. This isn't like fun, sexy projects. This is like the real work stuff that needs to be done to keep the town going. But then came a surprise invoice. I got a phone call from the town manager. It came to him first and he immediately reached out to me.
The bill was from the town's health insurance administrator. It said Belchertown owed an additional $900,000 in health insurance premiums.
Which is a major fiscal event for a town our size.
How did the use of GLP-1 drugs impact small town budgets?
What was going through your mind at first when you saw these numbers? I was shocked.
I was absolutely shocked. And my first reaction is, how can they do that?
At first, the board didn't even know what they were being charged for. But eventually, they learned that their health insurance administrator was facing massive deficits. A major cause? The growing use of GLP-1 weight loss drugs.
After all the careful planning we had done and the months we spent working on the budget, it was devastating.
Belchertown had no choice but to pay up, which meant it was faced with a big budget question. What's more important, health care or keeping the lights on?
I mean, what I want to really say is Belcher Town is not unique. Belcher Town is just, as I say in Boston, wicked good example of, you know, what can happen to a small town.
Welcome to The Journal, our show about money, business, and power. I'm Imani Moise. It's Monday, June 29th.
Coming up on the show, how small towns are tightening their belts to cover weight loss drugs.
Across the country, the cost of weight loss drugs for small town employees is starting to break the bank. Because for a small town of, you know, thousands of people versus millions of people, you know, all it takes is a few dozen people to be on these drugs for costs to start potentially rising quite quickly. We called up our colleague Owen Tucker-Smith, who answered from a hotel room in Missouri. I am on the economics team here at The Journal, so we're always roaming around the country looking for interesting economic stories, you know, towns and interesting conundrums, like for this story. A lot of these towns were already operating on super tight budgets, just enough to cover basics like payroll and electricity.
And so when you start to see costs rising by $100,000, it's something that might not, you know, be too problematic for a big city. But for some of these towns, that can really change the calculus of what they are and are not able to afford. So why did this issue catch so many towns by surprise? Yeah, so towns knew at the beginning that GLP-1 drugs were getting traction. But I think very few of them realized exactly how popular they were going to be. Or how expensive. Even after recent price cuts, these drugs can still cost insurers hundreds of dollars a month for each patient. Meanwhile, they're being prescribed more and more. According to Gallup polling, more than 12% of Americans reported taking GLP-1 drugs for weight loss last fall.
That's twice as much as the year before. the utilization of them has skyrocketed. And a lot of these kind of audit reports that the towns talk about, they were getting notes from their health insurance brokers just saying that the usage of these drugs had doubled or tripled or more over the course of a few years. And when you have a pretty expensive drug, that goes up so much so quickly in usage, it can kind of catch you off guard.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–0:31
2
What unexpected financial burden did Belchertown face?
0:31–1:30
3
How did the use of GLP-1 drugs impact small town budgets?
1:30–6:17
4
What led to the surprise $900,000 health insurance bill?
6:17–13:55
5
What challenges do small towns face in managing healthcare costs?
13:55–17:10