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Why Doesn’t Health Insurance Cover Medical Marijuana?

Twenty-nine states have legalized medical weed, after all.
Vince Chandler / The Denver Post via Getty Images

On Friday, US Health and Human Services Secretary Alex Azar was asked what role he sees medical marijuana playing as an alternative to opioids for relieving pain. He responded by saying there is “no such thing as medical marijuana.” Azar, a former lobbyist and executive at pharma giant Eli Lilly and Company, might want to visit a cannabis dispensary or two, because this is, of course, bullshit. Medical marijuana not only literally exists, it assists millions of patients with debilitating health conditions, including glaucoma, fibromyalgia, and epilepsy. Hell, the federal government even holds a patent on cannabis extracts for treatment of a myriad of diseases.


This is yet one more example how the United States is lagging behind Canada when it comes to drug policy, not just on our northern-neighbor's fight against opioid overdoses, but also regarding cannabis. Not only will Canada federally legalize recreational marijuana starting sometime this year (assuming there aren’t more delays), but following a landmark case last year, health insurance companies have begun covering medical pot. (Though cannabis is covered as “medical services and equipment,” not as a prescription drug.)

Will that ever happen in the US? It doesn’t seem likely anytime soon.

“As of right now, there is no FDA-approved marijuana product, and we therefore do not currently offer a prescription drug benefit for medical marijuana,” Marvin Hill Jr., the public relations manager at Humana, a multi-billion dollar health insurance firm, said in an email. “If there were to be an FDA-approved medical marijuana product in the future, it may be covered depending upon the terms of the individual member’s drug coverage.”

Contrary to that popular prohibitionist pitch that medical marijuana patients are “just faking it,” the bulk of scientific research indicates that cannabis has at least some health benefits, especially for pain. It can alleviate nausea in cancer patients going through chemotherapy. It can dull nerve pain and relieve muscles spasms for those with multiple sclerosis. It can help restrain seizures in children with epilepsy. And, as more research is done, we’re learning more about which conditions and ailments marijuana can potentially treat.


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But weed isn’t cheap. For a patient who ingests more a gram or more per day, it can cost thousands of dollars annually and that doesn’t include the cost of getting medically approved.

“There’s still a lot of risk associated with it,” explains Tamar Todd, the senior director of legal affairs at The Drug Policy Alliance. “The illegality of drugs makes drugs, in some context, more expensive because those who are growing it and providing it are taking risks. They also have regulatory costs at the state level, in some places they have taxes. [Marijuana distributors] are not entitled to some of the same tax exemptions that businesses are that aren't acting illegally under federal law…it all adds up to be very costly.”

Still, medical marijuana is legal in 29 states and Washington, DC, plus the US territories Guam and Puerto Rico. Almost two-thirds of the country—more than 200 million Americans—have access to medical marijuana, with just over 2.2 million patients, according to the Marijuana Policy Project. So why don’t health insurers in those states and territories cover it?

“Ultimately, I believe it will be covered,” Bob Morgan, an Illinois attorney who specializes in health insurance and cannabis law, tells Tonic. “But at the moment, there are a couple of reasons why that isn’t happening.”

Morgan was the project coordinator for the state’s medical marijuana program, which now serves about 30,000 patients. He says that with very few exceptions, health insurance won’t cover medications that aren’t prescribed by a physician and they cannot issue a prescription for a Schedule I controlled substance. (The Food and Drug Administration has approved two synthetic cannabinoids, however: nabilone and dronabinol.)


The Controlled Substances Act placed marijuana in Schedule I and declared it has “no currently accepted medical use” in 1970. In most, if not all states, medical marijuana is distributed on a doctor’s recommendation, but not a prescription. This distinction is important in the eyes of insurance giants. Legislators could add an exemption to the CSA for medical marijuana obtained lawfully, Todd says, but then marijuana would still likely need FDA approval to be covered as a drug. (Canada’s version of the FDA hasn't approved weed as a drug but Canadian health insurance company Sun Life got around that by covering weed as a medical service.)

There are workarounds, however, to getting the high cost of weed covered without these changes. “Some states do build in the cost of [medical marijuana] as part of the treatment for injury in the workplace,” Morgan says. “Some states do explicitly include cost of medical cannabis in the workers’ comp statutes under workers’ comp programs. Illinois does not, most states do not, but there are a few exceptions.”

New Mexico is one of those states. Ex-mechanic Greg Vialpando was at the center of a legal debate recently as to whether workers’ compensation insurance would have to cover his medical marijuana. Vialpando injured his lower back in 2000 and his former employer, Ben’s Automotive Services, now has to reimburse him for medical marijuana. (Of course, a direct payment to a dispensary would be easier, but that’s still illegal at the federal level.)


Other states with similar provisions for reimbursing medical pot under workers’ comp include Connecticut, Maine, Massachusetts, Minnesota, and New Jersey. (Six states specifically exclude medical marijuana from workers’ comp coverage: Arizona, Colorado, Michigan, Montana, Oregon, and Vermont.) However, cases where people are reimbursed are rare and again, due to federal law, payment from the insurer can’t involve the federal banking system, making coverage a little more complicated.

“It's obviously a really important public policy question, especially as we move toward legalization,” Todd says. “We need to be aware of this on the state level in terms of implementing policy and being conscious of the cost and access for patients.”

Of course, many FDA-approved medications are also prohibitively expensive, even for patients who have health insurance. The medical marijuana issue is part of the bigger problem regarding affordable healthcare in the US.

“It’s an unfortunate and less-discussed aspect of the way that we’re rolling out medical cannabis in the US,” Morgan says. “People that don't have the resources to pay $200 [to] $500 a month are missing out on access to medication that really could help reduce their pain and suffering…it's a barrier to access.”

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