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Medical marijuana regulation could lead to Medicaid cost cuts, Health Affairs study shows

Use of prescription drugs in Medicaid was lower in states with medical marijuana laws; estimated savings totaled about $1.01 billion.

Jeff Lagasse, Associate Editor

As more and more states adopt medical marijuana laws, making use of the drug increasingly accepted, a new study from Health Affairs finds such laws may be beneficial in cutting Medicaid costs because cannabis is often used as a substitute for Medicaid-covered prescription drugs.

Researchers compared prescription drug use in states with and without medical marijuana laws, focusing on nine broad clinical areas: anxiety, depression, glaucoma, nausea, pain, psychosis, seizure disorders, sleep disorders and spasticity.

In five of those areas, the use of prescription drugs in Medicaid was lower in states with medical marijuana laws than in states without such laws, and when taken together the estimated savings totaled about $1.01 billion. To date, 28 states and the District of Columbia have medical marijuana laws, although approved conditions differ under each law.

[Also: Doctors struggle with knowledge gap with medical marijuana laws]

The results are similar to those in a previous study, conducted by the same researchers, examining the link between medical marijuana laws and the number of prescriptions among the Medicare population. The authors suggested that in states with such laws, Medicaid and Medicare beneficiaries will fill fewer prescriptions. They also contended it's an indirect indication that marijuana indeed has accepted medical uses.

Broken down by condition, the study found medical marijuana linked to a 17 percent reduction in prescription drugs used to treat nausea; a 13 percent reduction in depression drugs; 12 percent reductions for those used to treat psychosis and seizure disorders; and an 11 percent reduction in drugs used to treat pain. Anxiety, glaucoma, sleep disorders and spasticity showed no significant link.

[Also: Conference of Boston Teaching Hospitals says marijuana legalization would cause public harm]

Total estimated Medicaid savings associated with these laws ranged from $260 million in 2007 to nearly $476 million in 2014. Since total spending in the fee-for-service Medicaid State Drug Utilization Data for 2014 was just under $23.9 billion, the savings related to these laws were equivalent to about 2 percent of total spending.

The authors said the spread of the laws, coupled with the increased availability of marijuana, may serve to normalize its use over time. As a result, they expect the impact on Medicaid savings to increase as the drug becomes more commonly accepted.

[Also: Medical marijuana yields modest budget benefits for Medicare Part D, study finds]

However, the study also acknowledges that some of the estimated savings represent a transfer of costs from Medicaid to its enrollees, who typically pay for marijuana out-of-pocket. But it notes that the potential savings to Medicaid is still significant given times of great budgetary pressure.

In 2016, the Drug Enforcement Administration retained marijuana's Schedule 1 status, reserved for drugs that are found to have no medicinal benefit. The authors propose rescheduling the drug to provide the window for a federal regulatory framework, and -- though politically unlikely -- allowing state Medicaid programs to cover the drug.

Twitter: @JELagasse

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