The enormous Medicaid cuts in the Senate Republicans’ health care bill wouldn’t just affect health outcomes for low-income Americans. They would also cut off a major funding stream for education services that benefit K-12 students, particularly those with special needs.
School districts receive about $4 billion in Medicaid reimbursements for salaries of staff who serve special education students, equipment such as feeding tubes and wheelchairs, and health screenings for low-income students, according to the AASA, The School Superintendents Association, an advocacy group for school leaders.
That $4 billion may seem like a small amount of money when you consider it makes up only 1 percent of Medicaid reimbursements; but given that only $13 billion in federal funding goes to helping schools comply with the Individuals with Disabilities Education Act (IDEA), it isn’t chump change.
IDEA funding is already insufficient. As part of the law, the government has been required to provide 40 percent of each state’s “excess cost” of educating kids with disabilities; but it only funded 16 percent of the cost in 2015, according to the Center for Budget and Policy Priorities.
Medicaid cuts would be one more indication that the administration, which has put its full weight behind the health care bill, is not concerned about the rights of students with disabilities. AASA said it is concerned that if Congress enacted a per-capita cap on Medicaid spending or block granted the program, schools would have to compete with hospitals and clinics for funding — and some schools may lose all of their funds as a result. In its January survey of 1,000 respondents in 42 states, AASA asked school leaders to share their views on how schools would cope with Medicaid cuts.
Most respondents said that if a 30 percent Medicaid reduction occurred, they would be concerned about negative impacts to special education, and some school leaders said compliance with IDEA might be in jeopardy.
A quarter of school leaders said they use Medicaid reimbursements for things like walkers, special playground equipment, and technology to help students see and hear. Two-thirds of those surveyed said they used the reimbursements for salaries of health care professionals. Schools may also lose money for what is known as Early and Periodic Screening, Diagnostic and Treatment (EPSDT), for low-income students to help them identify health issues and receive early treatment services such as occupational and physical therapy and hearing aids.
Community-based services — such as the Katie Beckett program, which allows kids with disabilities and illnesses from middle class families who wouldn’t normally benefit from Medicaid to receive services — would also be in danger of losing support, according to a June Center for American Progress report on the effect of Medicaid cuts on education services. (ThinkProgress is an editorially independent news site housed at the Center for American Progress.)
If school officials are concerned they won’t comply with IDEA, they may have to cut general education services as well, which would affect all K-12 students, said Harry Stein, director of fiscal policy at the Center for American Progress.
“Because they have to comply with the law, they will have to find that money somewhere,” Stein said.
The bill’s Medicaid cuts would affect also indirectly strain education budgets. In fiscal year 2015, federal Medicaid dollars accounted for 17.2 percent of state expenditures; if that money goes away, many states will likely dip into their education budgets to compensate.
K-12 education is less susceptible to deep cuts than higher education, said Stein. But it accounts for a large share of state budgets, meaning it will suffer in the event of a shortfall. For instance, education funding suffered significantly as a result of the Great Recession, with 34 states and the District of Columbia cutting K-12 education by the end of 2011. Without Medicaid, these cuts could have been far worse.
“What we saw from the Great Recession was that when there was a budget shortfall that increased, Medicaid helped to close that and alleviated the potential for tax increases that would have otherwise happened, as well as cuts to education, and particularly in higher education,” Stein said. “Medicaid is a huge part of the budget, so if there is a major change at the federal level, that’s a significant state budget issue.”