CANNAHealthcare Magazine Volume 5, 2nd Quarter, 2018 | Page 110

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WHAT IS ADVERSE

SELECTION?

Adverse Selection describes purchasing patterns affected by known medical infor-mation. For example, if one has been diagnosed with cancer, he or she will purchase coverage that best suits their medical condition. No one insurance company wants to be known as “the one” that has the best coverage for cancer because they will find themselves pulling those employers or individuals with those conditions into their pool, and the insurance company will end up with more of an unhealthy pool of subscribers than their competitors – affecting their pricing. This kicks off an underwriting spiral that negatively impacts (okay, crushes) their business. All insurance companies must spread out the risk. If one insurance company covers medical marijuana, they’ll want to be positive that their competitors will cover it too, so that individuals with illnesses that are helped through medical marijuana aren’t all flocking to the same insurance carrier.

Bottom line – because of adverse selection, insurance companies will not cover it individually. They will cover medicinal cannabis, potentially even gladly, especially if it helps solve some of the opioid crisis and costly Rx spend, but only if all the insurance companies they compete with also cover it.

This leads the discussion to the anti-collusion, anti-trust and anti-monopoly laws. Under these laws, competing companies cannot talk amongst themselves, cannot reach accords and do things to manipulate markets. The message here is the change cannot come from within the insurance industry itself either – they’re simply not able to talk to one another to reach an industry-wide agreement. It makes no difference that it may be in the public interest, there’s no exemption.

Insurance companies won’t go it alone due to concerns over adverse selection, and they can’t do it as a unified industry due to anti-trust regulations. Even if they want to.

The Amendment was recently

extended until February 8, 2018, but is often misunderstood as a prohibition on any federal medical cannabis prosecutions in states with medical cannabis laws. Rather, the Amendment is more accurately understood as a bar to federal prosecutions only when the accused can demonstrate that their conduct was expressly authorized by state law.

Public Health