Medicaid, Medicare and Mary Jane

The growing adoption of medical marijuana in U.S. states has had some surprising side effects—including saving Medicaid and Medicare millions in prescription costs.

Researchers at the University of Georgia examined Medicaid utilization data for prescriptions used to treat nine chronic conditions that also are known to be treated with medical marijuana. The study, which analyzed data from 2007-2014, found that in states that allowed medical marijuana, the number of fee-for-service Medicaid-billed prescriptions for other drugs dropped significantly across eight of nine conditions reviewed: Anxiety, depression, glaucoma, nausea, pain, psychosis, seizures and sleep disorders. The largest change—a reduction of 42 percent—involved medications used to treat nausea, according to the study's findings published in Health Affairs. The only category where prescriptions increased was spasticity medications

Using the billing data, the potential total cost savings for Medicaid in the states allowing medical marijuana ranged from $260 million to $475 million, the authors estimated.

In a 2016 study by the same authors, similar reductions were found in the number of Medicare Part D prescriptions, too. “We recently examined whether state medical marijuana laws were associated with changes in the use of prescription drugs approved by the Food and Drug Administration (FDA) among Medicare Part D enrollees, and we found statistically and economically meaningful reductions in prescription drug use associated with the laws,” the authors write. “This finding suggested that patients in states with such laws were substituting medical marijuana for prescription drugs.”

The study has raised an interesting issue for the Centers for Medicare and Medicaid Services, an agency that is under constant pressure to cut costs and make do with less. Yet, because marijuana is still classified as a Schedule I drug and is illegal under federal law, any healthcare organization that participates in CMS programs is forbidden from using medical marijuana, even in states that allow it.

“Of course, if the Drug Enforcement Administration reclassified marijuana as a Schedule II drug and state Medicaid programs covered medical marijuana (a politically unlikely scenario), much of our estimated savings could be shifted to the Medicaid program as payments for medical marijuana,” the study authors write.

As of April, 2017, 28 states and the District of Columbia have legalized some form of medical marijuana. If all 50 states allowed medical marijuana, the study authors suggest, the total savings for Medicaid fee-for-service could have exceeded $1 billion in 2014 alone.

Related article:

Medical marijuana: Hashing out the legal issues
Is senior care going to pot?

Pamela Tabar

Pamela Tabar was editor-in-chief of I Advance Senior Care from 2013-2018. She has worked as a writer and editor for healthcare business media since 1998, including as News Editor of Healthcare Informatics. She has a master’s degree in journalism from Kent State University and a master’s degree in English from the University of York, England.