Will Marijuana Be Covered by Your Insurance Plan?

By Markets Fool.com


Source: National Drug and Alcohol Research Centre, Facebook.

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Over the past two decades, marijuana has made some incredible strides.

In 1995 marijuana was not legal in any states, and according to Gallup, just 25% of its survey respondents were in favor of legalizing the drug. Then the wheels of change started spinning with California's legalization of medical marijuana in 1996.

Since this landmark legalization, we've seen 23 states and Washington, D.C. legalize medical marijuana, while another four states and D.C. have legalized marijuana for recreational use. Furthermore, two well-regarded polls from Gallup and the General Social Survey both recently noted that for the first time in history, the majority of respondents favored legalizing marijuana.

But can this rapidly changing tide of opinions sway your health insurer to begin covering marijuana under your health plan?

The chance of this happening anytime soon is extremely slim. However, let's examine what would need to happen in order for your insurer to consider covering marijuana for medical purposes -- and what I believe will ultimately keep that from happening.

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Source: Flickr user Shay Sowden.

Here's what would need to happen
We could recite the many roadblocks currently standing between marijuana and nationwide legalization, but the primary obstacle is the Controlled Substances Act.

The Controlled Substances Act currently lists marijuana as a schedule 1 drug. In other words, according to federal law, marijuana is illicit and doesn't have any medical benefits. That alone would preclude insurers from covering medical marijuana as an approved substance, even in the 23 states where it's currently legal.

Therefore the first step in getting health-benefits providers to cover medical marijuana would be to amend the Controlled Substances Act.

How could this be done? It would essentially require Congress and the president to come together and pass a bill making medical marijuana, or marijuana in general, legal to the extent that it would be free of federal prosecution. In order for that to happen, Congress would likely have to be overwhelmed by public support for such a bill, and a majority of individual states would need to have already legalized medical marijuana. Polls have suggested that the majority of Americans already support the approval of marijuana (in some cases by a narrow margin), but a slim majority of states still ban the use of medical marijuana.


Source: Flickr user David Shankbone.

Recently, three members of the U.S. Senate proposed a bill known as the CARERS Act, which is designed to end federal prosecution for medical marijuana and essentially make it a state control issue. Should the bill pass in its current form, it would open up marijuana for additional clinical research by removing some research roadblocks, allow financial institutions to legally make loans to medical marijuana enterprises, and, most importantly, allow marijuana to be rescheduled under the Controlled Substances Act to a schedule 2 drug. Although schedule 2 drugs are deemed to have high potential for abuse, they are also recognized for their medical benefits, and being a schedule 2 drug wouldn't preclude medical marijuana from being covered by insurers.

This would be the shortest and easiest path for medical marijuana to be covered by your health insurance provider.

And here's why medical marijuana won't be covered
The path to getting medical marijuana covered by health insurers may look simple: get it approved on a federal level and alter the Controlled Substances Act. However, there are other intangibles at play here that make this scenario unlikely to play out.

First, some aspects of medical marijuana's long-term use are still unknown. Up until the past couple of years, more than nine in 10 marijuana studies focused on its risks, rather than its benefits. Therefore the long-term study findings out there predominantly suggest that marijuana has potentially damaging side effects.

Source: National Drug and Alcohol Research Centre, Facebook.

For example, the National Drug and Alcohol Research Centre in Australia last year released a study on adolescent marijuana use and observed that daily marijuana users were 60% less likely to complete high school or college, seven times more likely to attempt suicide, and 18 times more likely to become dependent on the drug. Another study that came to light this past August suggests that adolescent brain development is adversely affected over the long term by marijuana use (although it's worth noting that the author's proclaimed the findings inconclusive).

Until longer-term studies and additional clinical trials can confirm marijuana's medical benefits, it could be difficult to convince insurers to cover medical marijuana.

Secondly, insurers face the issue of individual state jurisdictions doing whatever they please.

Colorado Gov. John Hickenlooper. Source: Facebook.

Take Colorado for example. Despite opposition from Gov. John Hickenlooper, Colorado's citizens voted to legalize recreational marijuana in November 2012. However, although marijuana is legal in both recreational and medical form in Colorado, residents cannot buy the product everywhere in the state. Per Colorado's Marijuana Enforcement Division, three-quarters of the jurisdictions within the state still ban either medical marijuana or recreational marijuana -- or both. This would make enforcing health insurance coverage for medical marijuana within a state practically impossible. What if a member moves? It's a logistical nightmare that insurers would just as soon avoid.

Lastly, even if medical marijuana were deemed safe in long-term studies, and even if insurers could somehow work around the aforementioned jurisdiction problem, the federal government's ban on the marijuana plant would still likely win out and prevent insurer coverage. Unless marijuana were legalized from a recreational perspective, it would still mean that the marijuana plant itself is illegal. Insurers and banks would much rather not open this Pandora's box.

Keep in mind that I wouldn't rule out the possibility that insurers will eventually cover marijuana as an approved medical product, but I believe that development is many, many years down the road.

The article Will Marijuana Be Covered by Your Insurance Plan? originally appeared on Fool.com.

Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.