BOSTON — The administration of Boston Mayor Michelle Wu is considering dropping GLP-1 coverage for weight loss for City of Boston employees due to “skyrocketing” health insurance costs that are straining the city’s finances.

Chief Financial Officer Ashley Groffenberger said in a letter to the Boston City Council Monday that the city has confirmed there will significant increases in employee premiums and health insurance costs for the fiscal year 2027 budget, due, in part to increased use of GLP-1 weight loss drugs like Ozempic and Wegovy.

The city is facing a potential 22.6% rate increase for next fiscal year. Employer health insurance costs – which cover roughly 55,000 employees, their families, and retirees — are projected to increase by nearly $80 million for the city, Boston Public Schools and the Boston Public Health Commission over fiscal year 2026, compared to the average annual increase of $10.6 million over the last eight years, Groffenberger said.

“Like other employers, the city has faced increased costs from the overall rise in healthcare expenses, a series of unusually high cost claims, and the growing use of GLP-1 medications for weight loss,” Groffenberger wrote.

“Currently, only approximately 7.7% of non-Medicare plan members are accessing GLP-1s for weight loss through the city’s health insurance — yet this utilization represents approximately 14.7% of the projected cost increase from FY26 to FY27, with GLP-1 for weight loss costs estimated at $31.6 million for FY26 and rising to approximately $47.4 million in FY27,” the CFO added.

Groffenberger said the city has sought to avoid dropping coverage of the popular weight loss medication for city workers — like what’s been done this year for state employees and residents enrolled with MassHealth — but union leadership’s rejection of its proposed utilization management alternative offer may have forced its hand.

She described utilization management as an “industry-standard cost containment tool that ensures prescription drugs are only prescribed when clinically appropriate.” The CFO estimated it would save the city between $8 million and $9 million annually in health care costs.

The city needs to engage in collective bargaining negotiations with the Public Employee Committee, which consists of public employee union representatives and a retiree representative, to make a change in health care benefits, Groffenberger wrote.

Groffenberger said the Wu administration presented PEC leadership with full information about “skyrocketing healthcare costs and an impending 22.6% rate increase” on Feb. 10, along with options to address costs including utilization management, but the offer was rejected by a hasty PEC vote on March 9.

Three unions representing a majority of those present at the meeting rejected the proposed changes, three unions voted to adopt utilization management, and “several other unions were unable to attend the meeting due to short notice,” Groffenberger wrote.

A source familiar with the matter said the push to reject the city’s proposal was driven by the Boston Teachers Union and the Boston firefighters union, Local 718, who comprised the majority of a vote that was held “with little notice.” The source said it “was just hostility immediately out of the gate, and an effort just to kill this, and never really entertain it.”

“The consequences of this inaction, if allowed to stand, are massive and immediate,” Groffenberger wrote. “Health insurance rates for non-Medicare plans will increase by 22.6% over FY26 — the highest year-over-year premium increase in recent history. These rate increases will be deeply felt by the city and across our workforce.”

Groffenberger said, for example, an employee enrolled in the city’s most widely used non-Medicare plan will see their monthly premium increase from $655 to $803, an increase of $148 monthly and $1,733 annually.

Elissa Cadillic, PEC co-chair, disputed the city’s cost-savings numbers, saying that using vs. not using utilization management would amount to less than 2% of the health care budget. She added that the unions don’t see GLP-1s as a major driver of negotiations.

“We are in the middle of a contract,” Cadillic said. “They’re asking us to break an agreement without actually coming to the table to truly bargain it, as we normally would with education and information, and that there is no definitive evidence that making this change would actually have any cost savings to the city. … We’re talking about a $3 difference between UM and not UM in a member’s paycheck, in the premium costs.”

Cadillic pushed back on the city’s assertions that the vote to reject UM was a hasty vote that was pushed through by a few major unions. She said all PEC union membership was represented and a preliminary vote was taken last month.

“This battle isn’t a battle; it’s something we’ve seen coming,” Cadillic said. “They’re talking about skyrocketing costs for premiums. We knew that was going to be the case. With being self-insured, we had a trust fund surplus that the city has been working on a plan to spend down over multiple years. … We knew that with the surplus going away, we were going to be starting to look at much higher premium increases than we had seen in previous years.”

Citing the city’s strained finances and unaffordable health care costs for employees, the city has requested that PEC leadership take another vote on its cost-cutting proposal for GLP-1 coverage, no later than this Friday, Groffenberger wrote.

“These significant financial impacts require a departure from standard practice, and we remain hopeful that the PEC will work with the city on a path forward that serves our workforce, maintains fiscal responsibility, and averts the need to pursue alternatives, such as joining the Commonwealth’s Group Insurance Commission, which has already voted to eliminate GLP-1 coverage for weight loss,” Groffenberger wrote.

Cadillic said she’s done outreach to PEC unions, who will collectively decide whether to vote again.

Groffenberger said the city will look to cut more costs as it prepares the FY27 budget, amid “constrained revenue growth” of 1.5% to 2% over this fiscal year, which ends June 30.

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