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Proposed Cuts to Medicaid Could Mean Big Cuts to School-Based Health Services

A young boy plays with his therapist in his home in York, South Carolina.

This column contains a correction.

Members of the House of Representatives are expected to vote soon on congressional Republicans’ plan for repealing the Affordable Care Act, a 2010 law that provided insurance coverage for more than 19 million previously uninsured individuals, bringing the number of uninsured in America to historic lows. The Congressional Budget Office estimates that the repeal plan—the American Health Care Act, or AHCA—would mean a loss of coverage for 24 million Americans and insurance premium increases of 20 percent over the next two years. The plan uses these cuts to coverage in part to pay for massive tax cuts for wealthy households, with the average taxpayer in the top 1 percent of earners—approximately $430,000 in adjusted gross income—getting a tax cut of $37,000.

The AHCA would also cut federal Medicaid spending by $880 billion, roughly 25 percent, over the next decade, dealing a devastating blow to the safety net for low-income families. The legislation has sparked outrage among health care interest groups and consumer advocates—including AARP, the American Medical Association, and Families USA—but the large cuts to Medicaid have also caught the attention of education policy and advocacy groups because of the potential impact on school-based health services.

Although it is not widely known, public schools receive a small portion of Medicaid dollars. Since 1988, schools and districts have been eligible to receive Medicaid payments for medical expenses they incur for providing services to students with disabilities under the Individuals with Disabilities Education Act, or IDEA, and for providing services such as health screenings, vaccinations, and behavioral health services to Medicaid-eligible children through Early and Periodic Screening, Diagnostic, and Treatment, or EPSDT. Although these services amount to only 1 percent of Medicaid’s annual budget, they are a significant portion of federal funding for schools, providing approximately $3 billion each year in federal funds. As a point of comparison, total federal funding for IDEA is $13 billion.

The Medicaid cuts in the AHCA include both cuts to traditional Medicaid spending and cuts that result from ending federal funding for the Medicaid expansion program. Medicaid expansion affects adults only, so is not expected to have a big impact on schools. The remaining cuts result from a transition to per-capita spending caps or a block grant. States that choose the block grant option would no longer be required to offer EPSDT benefits to children, which would likely mean even more far-reaching cuts to school-based Medicaid in these locales. In its cost estimate of the AHCA, the Congressional Budget Office did not elaborate on how much of the $880 billion total reduction in Medicaid outlays would be from eliminating federal funding for the Medicaid expansion and how much would come from the spending caps and block grants.

Complicating the effect of Medicaid cuts on schools further is the likelihood that schools could face disproportionate cuts if forced to compete for limited funding with hospitals, urgent care clinics, and doctors’ offices. For these reasons, it is difficult to know exactly how states will respond to the proposed Medicaid cuts and how schools in turn will be affected. For the purpose of this analysis, we calculated the effects of a hypothetical cut to Medicaid in schools of 20 percent. This number was chosen based on the AHCA’s overall cuts to Medicaid of 25 percent and the intervening factors discussed above.

As the charts below detail, these cuts could be devastating for school-based health and instructional services personnel. According to a recent survey of nearly 1,000 school and district leaders from 42 states, 68 percent of respondents use these Medicaid reimbursements to pay for the salaries of school-based health professionals, including school nurses, school counselors and psychologists, school-based physical therapists, and speech-language pathologists. The drastic cuts to Medicaid included in the AHCA could mean major cuts to these critical personnel and would ultimately hurt students of all income levels and abilities.

The cuts could pay the salaries of 12,539 school nurses, 9,877 school social workers, 8,094 school counselors or psychologists, 9,500 school-based physical therapists, or 10,000 speech-language professionals, who could be at risk of layoffs if the AHCA were enacted. For context, these numbers equate to 17 percent of school nurses, 27 percent of school social workers, or 19 percent of school counselors and psychologists nationally.*

Through both the AHCA and the Trump budget proposal for fiscal year 2018, the administration and congressional Republicans have made clear their intent to dismantle the safety net for families and children. Without the support of Medicaid dollars, schools and districts across the United States would lose critical funding that they use to provide all students, especially low-income students and students with disabilities, with the health, mental health, and special education services that they need in order to succeed.

* Correction, March 24, 2017: This column has been updated to reflect the correct estimates of school employees whose salaries would be affected under the AHCA cuts to Medicaid.

Lisette Partelow is the Director of K-12 Strategic Initiatives at the Center for American Progress. Kami Spicklemire is an Education Campaign Manager at the Center.