A study says states with medical pot see decreasing insurance premiums

You don't need a green card to see green. Just living where medical marijuana is legal can save you money.

A study published this fall in the International Journal of Drug Policy shows that states that legalized medical marijuana have seen a drop in health insurance premiums across the board, regardless of whether people use medical marijuana. The study, from researchers at Illinois State University and Bowling Green State University, found that health insurance premiums are falling in states which have legalized medical marijuana.

Researchers found that premiums — the amount individuals pay simply to have insurance, often up-front on a monthly basis — have fallen over the years in states which have legalized medical marijuana, relative to states which have not.

Cannabis use, on a case-by-case basis, could normally be cause for increased premiums, much like tobacco or alcohol consumption. Cannabis use can be viewed as a risk, and risks tend to lead to increased cost. What these researchers have found is the opposite in aggregate.

"Our findings suggest that households that obtain their health insurance on the individual (i.e., not employer sponsored) market in states with [legalized medical cannabis] appreciate significantly lower premiums," the researchers state.

The insurance industry operates on the law of large numbers. When more people have insurance, the insurance companies have a better idea what the statistically average cost will be for each individual they insure.

"In this study, we provide evidence of a statistically significant reduction in individual market premiums starting seven years after the implementation of medicinal cannabis laws. Because of the pooled nature of insurance, the lower premiums benefit cannabis users and non-users alike in medical cannabis states. Our results are important as health care expenses, including health insurance premiums, have been growing faster than inflation and comprise an increasing share of a household's budget," the researchers state.

This study finds that in states where medical marijuana has been legalized, insurance companies believe their cost will be less per person, and as a result they can pass on lower costs to their consumers.

Simply put, this study finds that insurance companies are increasingly diminishing their view of the risk they take on from people who live in medical marijuana states, whether those individuals smoke or not. ♦

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