Show Me Your Budget, and I’ll Tell You What You Value (Hint: It’s Not Medicaid in Schools)

President Trump’s FY19 budget once again seeks to end Medicaid as we know it. The budget embraces a per-capita cap funding proposal frequently referred to as “Graham-Cassidy” that would replace the existing federal-state financial partnership with capped Medicaid funding at a set amount per beneficiary—regardless of the costs to the state. Specifically, the President’s FY19 budget would reduce federal Medicaid spending by $1.439 trillion from 2019 to 2028. Not coincidentally, it is also the price tag of the tax reform bill that passed in December.

What would this policy proposal, if approved, mean for the school districts that rely on Medicaid for $4 billion dollars a year (less than 1 percent of the total annual spending on Medicaid)? It would leave states in the unenviable position of footing a Medicaid bill they can’t afford to pay. When governors, state legislatures and Medicaid directors realize they can’t maintain their Medicaid programs, they will then have to make tough funding choices. They could, of course, choose to cut education budgets statewide to pay for healthcare.

Within the Medicaid realm, their choices include: setting limits on covered benefits, reducing reimbursement rates for providers, and limiting which providers can bill Medicaid. All of these options will harm children—who comprise 40 percent of total Medicaid beneficiaries and rely upon the program for their healthcare. However, the final option, limiting which providers can bill Medicaid, should be of serious concern to school leaders.

Here’s how it could play out: As states look for savings and examine the entities that bill Medicaid currently—doctors, insurers, assisted living facilities, pharmaceutical companies, hospitals, clinics, schools—they could notice that one of these entities is not traditionally considered a front-line healthcare provider: schools. As such a small piece of the Medicaid pie and one that serves a vulnerable, non-voting population, it’s easy to see how schools could lose their Medicaid dollars to prop-up other important healthcare providers.

Assuming a savvy policymaker would want to know the consequences if districts stopped receiving their Medicaid dollars, AASA asked more than 500 superintendents in 46 states that exact question. Here is what we learned.  

What would happen if schools lose Medicaid dollars?