Cutting Medicaid Would Hurt Public School’s Efforts to Improve Student Success

Teacher and group of kids in kindergarten

The School Superintendent’s Association just released a survey documenting the concerns that superintendents and other school leaders have about Congressional plans to cut Medicaid spending. CCF spoke with Sasha Pudelski, author of the report Cutting Medicaid: A Prescription to Hurt the Neediest Kids, about the impact Medicaid cuts would have on students and schools. 

Can you tell us how you conducted the survey and what you found?

Sasha: AASA, along with our partners, the Association of School Business Officials and the Association of Educational Service Agencies, conducted a survey in January 2017 to assess the impact of potential per-capita caps or block grants to the Medicaid program in schools. We received close to 1,000 responses from 42 states.

Our survey found that school leaders are deeply concerned that students in special education programs will be negatively impacted if a 30 percent Medicaid reduction were to occur. Specifically, there are concerns about the ability of districts to maintain special education program quality and meet federal mandates.

School leaders were equally worried about how students in poverty will be impacted if Medicaid’s child-centered EPSDT benefit package were to be weakened and development screening and other services were no longer a reimbursable expense.

How would changing Medicaid’s financing structure and benefits package impact children?

Sasha: Reduced federal expenditures and a lack of responsiveness to adjust funding because of changing health costs and circumstances would create more intense competition for limited Medicaid dollars between hospitals, doctors, urgent-care clinics, and other healthcare centers. The National Alliance for Medicaid in Schools estimates that public schools now receive less than 1 percent of the federal Medicaid allocation, so it is unlikely schools would be able to compete for funds with these other providers. The assumption is that schools would experience a 30 percent reduction in Medicaid funds if restructuring occurs or that states would opt to cut them out of Medicaid reimbursement altogether.

Why are students with disabilities particularly vulnerable?

Sasha: Placing arbitrary caps on Medicaid funding through a block grant or per-capita cap formula would disrupt and damage a cost-effective program that has successfully helped schools meet the health care needs of children with disabilities for decades and is premised on the mandate that schools provide services to children without regard to funding. The devastating effects would be intensified for public schools who have an obligation to serve all students. Funding for mandated services, i.e. special education, would be reduced and would put children at risk and increase costs to state and local taxpayers.

Are there other student populations that would be particularly hard hit if the federal government reduced it’s support for Medicaid or changed the child-centered benefit package?

Sasha: Absolutely. School Districts that are reimbursed for EPSDT services are better equipped to address the basic health care needs of low-income students and ensure they receive appropriate physical, mental and developmental health services. Many respondents indicated low-income students would lose critical care if a 30 percent reduction in Medicaid were to occur. Specifically, vision and hearing screenings, immunizations and diabetes and asthma management would all be more difficult to provide to students, if not impossible.

How would these changes impact other children – beyond those directly served by Medicaid?

Sasha: Because of the chronic underfunding of special education at the federal and state level, all local contributions for special education “encroach” upon their general education programs. Medicaid reimbursement is helpful in that it mitigates that encroachment, so districts can offer critical healthcare services to general education students, as well as students with disabilities. Medicaid returns some funding to the district that can go back into the special education programs, reducing the need to dip into general education coffers to subsidize services for disabled students. Placing an arbitrary cap on Medicaid funding would mean districts are forced to cut services where they can legally do so (general education) in order to continue meeting the needs of students they must legally prioritize serving (special education students). That means that regardless of a student’s income or need for specialized services, every student could experience changes to the programs and professionals available to them due to a major loss of funding for the district.

Who is going to pick up the slack? Will local and state governments have to increase taxes? Or will we see layoffs in local school districts?

Sasha: Potentially both. Our survey demonstrates that members feel strongly that layoffs are a real possibility given that two-thirds of districts supplement salaries for school personnel with Medicaid reimbursement. The most obvious folks on the chopping block are school nurses since their services are not always tied to IDEA students. Next would be the mental health professionals like social workers, school psychologists who serve all students and critically important to students in poverty, but whose services may not be necessary through special education. Finally, we would see cuts or furloughs to the professionals who serve special education and 504 eligible students: speech language pathologist, OTs/PTS, paraprofessionals who provide one-on-one nursing care, etc.

In addition to cutting jobs, districts may, if they can, need to raise revenue simply to keep what they need to have in place. Districts already running in the red, which is more common than one would assume, will be further pinched to use levy’s.

What about district’s role in enrolling eligible children in Medicaid? How will that be impacted?

Sasha: Even before the ACA, many districts had taken steps to identify and enroll Medicaid eligible students who were uninsured. In our survey, 50 percent of districts indicated they have folks on the ground who regularly connect Medicaid students with providers, like pediatricians and community-based health organizations. Luckily, Medicaid reimburses districts for the administrative side of program management so the professionals who do this important work of connecting kids with healthcare are not paid for solely by school district funds. If school-based Medicaid reimbursement is cut, there is little likelihood districts will be able to afford to pay individuals to do this important work.

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