To Save Medicaid Money, It’s Time to Take Medical Cannabis Seriously

The debate on how to reform Medicaid is not one that just started with the Trump administration. This has been a discussion in state capitols and the halls of Congress for almost the entirety of the 52-year program. With more than 70 million beneficiaries, Medicaid is the country’s largest health insurer and currently costs states and the federal government over $500 billion each year.

In the recently House-passed American Health Care Act, a number of Medicaid reforms were included which would decrease federal spending to the program by $880 billion over 10 years. Additionally, President Donald Trump’s first budget proposes massive cuts to the program. Many are concerned that these cuts are too significant and will ultimately result in millions of low-income Americans being cut from the program. It’s unclear what changes will be made to the Medicaid provisions of the bill in the Senate, but one cost-saving solution that is not being discussed is medical cannabis.

A recent study by Health Affairs, found that Medicaid beneficiaries in the 28 states and the District of Columbia where medical cannabis is legalized, significantly decreased their use of prescription drugs resulting in cost savings to the Medicaid program. The study went on to find that if medical cannabis was legal in all states, the estimated total savings could be over $1 billion in Medicaid fee-for-service. In times of budget pressure, these savings could be significant for both states and the Federal government, especially if also expanded to the Medicaid managed care population.

It’s time for states, Congress and the Trump administration to recognize that there is now proven science and research behind the fact that medical cannabis is a safe alternative to prescription drugs, and that there are Medicaid cost savings associated with it.

As Medicaid is restructured and reformed consideration must be given to how allowing beneficiaries in every state safe and legal access to medical cannabis could reduce costs in the program. Efforts should be made at the Federal level to protect states that have already passed medical cannabis, especially at a time when President Trump and his administration are sending mixed signals on their position on the issue.

Congress should also focus on other federal measures that support the expansion of the legal medical cannabis market. As a start, the newly created Congressional Cannabis Caucus is doing just that by developing policies that protect and preserve state based cannabis programs. However, there are still many members of Congress who do not support medical cannabis programs, who should reconsider their stance and on this issue and consider the benefits it could offer their states including cost savings to Medicaid programs.

Last week, a Capitol Hill briefing took place to educate members of Congress and their staff on the science of cannabis for medical cannabis patients. We hope leaders from the recently formed Republican and Democratic health care work groups attended and will start to consider medical cannabis as one of the cost saving solutions for Medicaid. Additionally, governors must ensure their support for state medical cannabis programs are heard at both the state and federal level. It’s time to consider new ways to reduce cost in the Medicaid program and medical cannabis and the potential billion dollars of savings it can bring make it worthy of being a serious part of the discussion.


Arika Pierce is a Principal at Gide, a public affairs firm which specializes in working with companies in emerging markets, including the legal cannabis industry.

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