Nationwide Legalization Of Medical Marijuana Could Save $29 Billion In Annual Health Insurance Costs, Study Finds

New research by the medical cannabis company Leafwell suggests that state-level medical marijuana legalization may significantly reduce health insurance costs. In states with legal medical cannabis, companies paid 3.4 percent less for health insurance premiums compared to where marijuana remained illegal—a savings of about $238 per employee per year.

If all states were to implement medical cannabis programs, the study says, the country could save an estimated $29 billion in health insurance costs annually.

“This report strengthens the case that investing in cannabis care isn’t just beneficial to patient care, it’s also good for business efficiency,” Leafwell Chief Medical Officer June Chin said in a statement about the new findings. “By including cannabis in insurance plans, employers can foster a more inclusive and supportive work environment, enhance employee satisfaction, and ultimately contribute to a healthier, more resilient workforce.”

The study, published this month in the journal Applied Health Economics and Health Policy, looked at data from an annual surveys of employers, analyzing a period from 2003 to 2022.

“Over the first ten years of a state implementing medical cannabis laws, we found evidence of reductions in health insurance premiums for single and employee-plus-one coverage plans,” the company said in a release. In addition to lower single-employee premiums, costs for employee-plus-one coverage plans were $348 lower per employee per year.

If all 50 states legalized medical marijuana, “employers and employees could collectively save billions on healthcare coverage.”

Leafwell

Taking into account both single-employee and plus-one plans, as well as savings to both companies and their workers, Leafwell said nationwide medical marijuana legalization could ultimately save $29 billion in healthcare costs annually—$22.9 billion among employers and $6.5 billion among workers themselves.

“Under a hypothetical scenario where all 50 states adopted medical cannabis in 2022,” wrote the four-author Leafwell team, “we estimated that employers and employees could collectively save billions on healthcare coverage, potentially reducing healthcare expenditure’s contribution to GDP by 0.65% in 2022.”

The company said the research also “supports positive social changes.”

“By looking at how cannabis laws affect healthcare costs, we can create policies that focus on improving public health and health equity,” a company press release said.

“Adoption of a medical cannabis law may contribute to decreases in healthcare costs,” the report concludes. “This phenomenon is likely a secondary effect and suggests positive externalities outside of medical cannabis patients.”

Leafwell

A year ago, a separate report in the International Journal of Drug Policy detailed similar findings: While reductions in health insurance premiums were modest immediately following legalization, the study found that by seven years after implementation, annual premiums had fallen by $1,663 compared to states in the control group. Similar reductions were seen after eight years ($1,542) and nine years ($1,626), indicating that the decline in costs was fairly stable over time.

“Although the effect does not begin until seven years post-medical cannabis law implementation,” the authors of that study concluded, “there is a significant and sizable reduction in health insurance premiums” in states that legalize medical marijuana.

“Due to the nature of insurance pooling and community rating,” they added, “these savings are appreciated by cannabis users and non-users alike.”

And as that study’s authors pointed out, the findings undermine concerns that legalization would risk increasing healthcare costs. “Initial concerns about medical cannabis legalization leading to increases in medical care costs, which would be reflected in higher insurance premiums, appear to be unfounded,” they wrote.

The research adds to a growing body of research identifying the potential public health benefits associated with ending prohibition. A number of studies, for example, have found that states with medical marijuana have significantly lower rates of prescribed opioids. Last year, a report found that adult-use legalization was similarly associated with “reductions in opioid demand.”

A study this month reinforced those findings, noting reduced use of opioids and other medications among people with arthritis and other rheumatic conditions.

A separate study last year determined that states with legal medical marijuana had lower opioid payments to doctors—another indication patients are using cannabis as an alternative to prescription drugs.

On the individual level, a recent study in the International Journal of Drug Policy found that cannabis significantly reduced opioid cravings for people using opioids without a prescription, suggesting that expanding access to legal cannabis could provide more people with a safer substitute.

A study published last January by the American Medical Association (AMA), meanwhile, found that roughly one-in-three chronic pain patients report using cannabis as a treatment option, and most of that group has used cannabis as a substitute for other pain medications, including opioids.

A separate AMA study found an association between state-level medical cannabis legalization and significant decreases in opioid prescriptions and use among certain cancer patients.

A study published last September found that giving people legal access to medical cannabis can help patients reduce or stop use of opioid painkillers without compromising their quality of life.

The same month, another study found that the pharmaceutical industry takes a serious economic hit after states legalize marijuana—with an average market loss of nearly $10 billion for drugmakers per each legalization event.

Medical Marijuana Leads To ‘Improvements In Physical, Social, Emotional And Pain-Related’ Quality Of Life, Study Shows

Photo courtesy of Mike Latimer.