US: Medical cannabis lowers health insurance premiums – study

A new study has found that states which have legalised medical cannabis have seen a drop in the average cost of individual healthcare premiums.

Researchers from Bowling Green State University in Ohio and Illinois State University looked at the impact of state-specific medical cannabis legalisation laws on individual health insurance premiums. 

They compared trends in premium costs in states with and without legalisation over an 11 period from 2010 – 2021.

According to the findings, published in the International Journal of Drug Policy, prices for individual premiums fell in states with legal access to medical cannabis, when compared with those jurisdictions where it remained prohibited. 

The researchers observed an ‘statistically significant’ reduction of $1662.7 in insurance premiums seven years after the introduction of medical cannabis laws, compared to a control group which saw a reduction of $1541.8 in year eight, and a reduction of $1625.8 in year nine.

They determined: “Initial concerns about medical cannabis legalisation leading to increases in medical care costs, which would be reflected in higher insurance premiums, appear to be unfounded.”

Due to the pooled nature of insurance, the reduction in premiums benefit both medical cannabis consumers and non-consumers in states with legalisation. This is particularly important given the rising costs of healthcare facing US citizens, with health insurance premiums increasing at a rate faster than inflation and now eating into a significant share of household budgets. 

The authors estimate that the national legalisation of medical cannabis could see overall heath insurance savings of more than $16.8 billion in the individual market.

They conclude: “The implementation of MCLs [Medical Cannabis Laws] lowers individual-market health insurance premiums. Health insurance spending, including premiums, comprises between 16% and 34% of household budgets in the United States. As healthcare costs continue to rise, our findings suggest that households that obtain their health insurance on the individual (i.e., not employer sponsored) market in states with MCLs appreciate significantly lower premiums.”

Consistent with previous research

A previous study from 2017 found that access to medical cannabis is associated with a reduction in Medicaid costs. 

Researchers at the University of Georgia assessed the association between medical cannabis regulations and the average number of prescriptions filled by Medicaid beneficiaries between the years 2007-2014.

They estimated that nationwide legalisation could reduce Medicaid costs by over $1 billion, stating: “Researchers reported: “[T]he use of prescription drugs in fee-for-service Medicaid was lower in states with medical marijuana laws than in states without such laws in five of the nine broad clinical areas we studied.

“If all states had had a medical marijuana law in 2014, we estimated that total savings for fee-for-service Medicaid could have been $1.01 billion.”

A separate study from 2016 reported that medical cannabis access was associated with significantly reduced spending by patients on Medicare Part D approved prescription drugs.

Read more about the study here 

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