As the largest single payer of health care in the country, Medicare’s proposal to no longer cover a medical procedure strongly influences what procedures employers and health insurers will cover.

Medicare already covers bariatric weight-loss surgery for individuals considered morbidly obese, a decision that has led to the growth in popularity of the surgery and a willingness among employers to cover it.

Until Monday’s announcement, Medicare also covered the surgery for people with Type 2 diabetes. Citing a lack of efficacy, however, the agency said it would no longer pay for the surgery for Type 2 diabetics whose body mass index was below the threshold of 35, indicating severe obesity. Body mass index above 40 is considered morbidly obese.

“We have said definitely Type 2 diabetes is a cause for the surgery, but we’re limiting it to patients with BMI over 35,” said Medicare spokesman Don McLeod.

Research published this year in the Journal of the American Medical Association that showed significant health improvements for obese diabetics who underwent the surgery gained wide attention and sparked interest among employers who believed the high cost of the surgery—between $15,000 and $30,000—could be justified if it reduced health care costs associated with diabetes. The 60 people in the trial had a body mass index between 30 and 40.

But Medicare, in justifying its proposal, said generally that studies examining the efficacy of the surgery for diabetics did not sample a wide enough group to conclusively show the same kind of benefit for diabetics who were not morbidly obese.

“While recent medical reports claimed that bariatric surgery may be helpful for these patients, Medicare did not find convincing medical evidence that bariatric surgery improved health outcomes for non-morbidly obese individuals,” the agency said in a statement.

Medicare’s decision will be open to public comment for 30 days.

—Jeremy Smerd