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Does the legalisation of cannabis for medicinal use impact private health insurer prescription drug expenditures?

Author

Listed:
  • Amanda C. Cook

    (Bowling Green State University)

  • E. Tice Sirmans

    (Illinois State University)

  • Brenda Wells

    (East Carolina University)

Abstract

We evaluate whether health insurer aggregate prescription drug expenditures change after the legalisation of medicinal cannabis using U.S. health insurer financial filings reported to state insurance regulators and compiled by the National Association of Insurance Commissioners for private health insurers from 2010 to 2018. We analyse this question for health insurers in the individual market, which includes plans sold on the Affordable Care Act exchanges, the small group market, which consists of fully insured plans sold to employers with fewer than 50 employees, and the large group market, which consists of fully insured plans sold to employers with more than 50 employees. For all three markets, the treatment effects are not significant. Thus, we find no impact of medical cannabis legalisation on health insurer prescription drug expenditures, despite the potential disruption to the health insurance market. Had legalisation increased prescription drug expenditures, the increases in cost would have been borne by enrollees, which is troubling since healthcare costs are rising faster than inflation.

Suggested Citation

  • Amanda C. Cook & E. Tice Sirmans & Brenda Wells, 2024. "Does the legalisation of cannabis for medicinal use impact private health insurer prescription drug expenditures?," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 49(1), pages 212-226, January.
  • Handle: RePEc:pal:gpprii:v:49:y:2024:i:1:d:10.1057_s41288-022-00284-4
    DOI: 10.1057/s41288-022-00284-4
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    References listed on IDEAS

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    3. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    4. Jiebing Wen & Hefei Wen & J. S. Butler & Jeffery C. Talbert, 2021. "The impact of medical and recreational marijuana laws on opioid prescribing in employer‐sponsored health insurance," Health Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 989-1000, May.
    5. McMichael, Benjamin J. & Van Horn, R. Lawrence & Viscusi, W. Kip, 2020. "The impact of cannabis access laws on opioid prescribing," Journal of Health Economics, Elsevier, vol. 69(C).
    6. Pragya Kakani & Michael Chernew & Amitabh Chandra, 2020. "Rebates in the Pharmaceutical Industry: Evidence from Medicines Sold in Retail Pharmacies in the U.S," NBER Working Papers 26846, National Bureau of Economic Research, Inc.
    7. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
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