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Is Marijuana Legalization the Answer to Medicaid’s Costs?

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Is Marijuana Legalization the Answer to Medicaid’s Costs?

Erica Block

Updated: November 12, 2018    Published: May 15, 2017

Is Marijuana Legalization the Answer to Medicaid's Costs |
Image: Retinafunk / Flickr

Nationwide marijuana legalization could save $500 million per year on overall Medicaid costs.

Medicaid enrollees use fewer prescription drugs in states where the use of marijuana for medicinal purposes is legal, new research shows. A study published last week in Health Affairs by researchers at the University of Georgia shows medical marijuana is having a positive impact on the bottom line of Medicaid’s prescription drug benefit program.

Authors of the study examined quarterly data on all fee-for-service Medicaid prescriptions between 2007 and 2014, noting a strong correlation between a state’s regulation of medical marijuana and fewer Medicaid prescriptions being filled in that state. They estimate Medicaid programs in the U.S. could save over $500 million annually if all states were to legalize medical marijuana. As of May 2017, 28 U.S. states and the District of Columbia permit the use of marijuana for medicinal purposes.

The study is the first to examine whether legalization of marijuana affects how frequently doctors prescribe drugs to patients and whether the change in doctors’ clinical behavior has the potential to curb public health costs. The findings also excite addiction and public health specialists eager to incorporate the research in policy efforts to curtail the opioid crisis.

Marijuana legalization, to be sure, is by no means a panacea for our country’s opioid crisis. Nonetheless, fighting a national epidemic of this magnitude requires multifaceted solutions; indeed, most Americans agree that policymakers ought to approach the problem from all angles. Yet despite lawmakers like Sen. Elizabeth Warren touting marijuana reform for its potential to curb opioid abuse, the federal government has been slow to respond to mounting evidence that there are fewer opioid-related overdoses in states where medical marijuana is legal.

Of course, because few studies have analyzed the effects of marijuana legalization, more research must be done to fully understand its impact on prescription drug consumption. Many questions remain. For one, some addiction psychiatrists question whether medical marijuana patients might in some cases be getting inferior or incorrect treatment, and if so, whether resulting costs would offset Medicare drug savings.

And then there’s the cost of marijuana itself. Patients must pay for the drug out of pocket–health insurance plans don’t cover Marijuana. For that to change, Drug Enforcement Agency (DEA) would need to reclassify marijuana as a Schedule II drug–in the company of drugs like morphine and amphetamine salts–which would allow doctors to prescribe it and increase the likelihood of insurance covering its cost.

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