Dallas’ employee health plan is staring at a roughly $17 million shortfall this fiscal year as prescriptions for GLP-1 weight loss and diabetes drugs spike and a cluster of very expensive medical claims sends costs soaring. New prescriptions and higher pharmacy use have shoved drug spending sharply upward, and city managers warn the gap could eat into money that would otherwise support city services and employee pay. Officials are weighing midyear surcharges and other budget maneuvers while trying to keep coverage intact for diabetes patients.
According to The Dallas Morning News, city staff now expect the employee health plan to finish the year about $17 million over budget. A recent coverage review found roughly 1,360 members on GLP-1 medications in April 2026, up from about 940 a year earlier, and GLP-1 drug spending climbed about 69% year over year, rising from roughly $6 million to nearly $11 million. The reporting also highlighted 24 plan members with individual claims over $100,000 and five people who each generated more than $1 million in claims in 2024, adding millions more to the plan’s tab.
City Slides Flag Pharmacy Surge And Big-Ticket Claims
The City of Dallas budget presentation to the council lists “increased pharmacy cost and utilization, particularly for GLP-1 and specialty medications” as a top driver of the health benefits overrun. In that presentation, the Employee Health Benefits forecast is shown running about $13.8 million above budget, with roughly $9.9 million of that hitting the General Fund. Staff laid out midyear options that include a surcharge allocation to departments, a selective hiring freeze and tighter limits on overtime. The slides also stress that pharmacy trends are part of a broader financial squeeze that includes mounting overtime and pension pressures.
Furloughs And Hiring Limits Already In Play
City leaders have not waited for the health plan bill to come due. This spring, they rolled out cost-cutting moves that include a hiring freeze and restrictions on non-essential overtime, and officials announced furlough days for many civilian employees as part of a broader push to close a roughly $30 million gap. Reporting from The Texas Tribune notes that higher pharmacy costs, with GLP-1s specifically called out, were among the factors managers cited when explaining why those measures were necessary. City staff says the budget process will run through the summer as they work toward a balanced plan for FY27.
GLP-1 Boom Puts Pressure On Plans Nationwide
The surge in use is not just a Dallas story. A KFF Health Tracking Poll from November 2025 found that about 12% of U.S. adults reported currently taking a GLP-1 drug and roughly 18% said they had used one at some point. That kind of rapid uptake is helping to drive pharmacy spending higher for employers and public plans across the country, even as clinicians continue to point to the benefits of GLP-1s for diabetes management.
What Dallas Officials Are Willing To Cut
City materials and reporting indicate staff has modeled potential plan design changes, and one human resources draft previously estimated that excluding injectable weight loss drugs such as Wegovy, Saxenda and Zepbound could affect more than 600 members and might trim costs by roughly $3.7 million. City officials and union leaders are divided over how far to go. Some argue that benefits should be treated as an investment in recruitment and retention, while managers are pushing for tools that can rein in fast-rising claims and prescription spending. Dallas leaders say they are not looking to remove coverage for standard diabetes care, even as they examine options aimed specifically at the cost of weight loss drugs.
Council members are expected to keep reviewing expense projections and Budget Accountability Reports through the summer while staff finalizes recommendations ahead of an expected budget presentation to the City Council on August 11. For now, the city says it will try to blunt the health plan shortfall with a mix of departmental surcharges, staffing and overtime controls, and other operational belt-tightening while the bigger budget picture comes into focus.
