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The Consequences of Medicaid Cuts on Public Schools

July 12, 2017

The GOP campaign promise to repeal and replace the Affordable Care Act has been central to the political action in Congress since President Trump’s inauguration. The questions now, are what will the replacement be and what consequences will the legislation have? 

The House voted to pass the American Health Care Act (AHCA) which would cause 23 million Americans to lose their insurance coverage, according to the Congressional Budget Office Report. [1] Senate Majority Leader Mitch McConnell delayed a vote on a Senate version of the bill after dissent from both sides of his party threatened passage. While initially much of the focus was on individuals with pre-existing conditions, attention shifted to the impact on Medicaid recipients. Medicaid not only serves poor and disabled adults, but also senior citizens in need of long-term care and other services not covered by Medicare, and children with disabilities.

One of the little-known implications of an ACA repeal is the negative impact that a reduction in Medicaid funding will have on public schools. A program that provides health services for children with disabilities naturally impacts the institutions in which children spend most of their day. A rollback of the Medicaid expansion, or even a restructuring of Medicaid to a per capita system, could be devastating to all children in public schools. 

A Refresher on Medicaid

Many Americans assume that Medicaid only provides coverage for other people: poorer, sicker Americans. However, Medicaid is a more far-reaching institution than most realize. According to the Center on Budget and Policy Priorities, “Medicaid provides affordable and comprehensive health coverage to over 30 million children.” [2] Medicaid also yields good results: children with Medicaid have better health results as adults, experience fewer medical emergencies, and are more likely to succeed academically and financially later in life than uninsured peers.  [3] 

Medicaid also fills in coverage gaps for privately insured children with disabilities, since “over one-third of insured children with disabilities report inadequate coverage,” according to PolicyLab at Children’s Hospital of Philadelphia. [4] According to the Kaiser Family Foundation, Medicaid has a unique role in states’ budgets. It is “the largest single source of federal funds for states, accounting for more than half (56.8%, or $329 Billion) of all federally supported spending by states in SFY 2015.” [5]

Image: Share of Nonelderly Adults Without Health Insurance Coverage Under Current Law and Two Versions of H.R. 1628, by Age and Income Category, 2026. Source: Congressional Budget Office.Image: Share of Nonelderly Adults Without Health Insurance Coverage Under Current Law and Two Versions of H.R. 1628, by Age and Income Category, 2026. Source: Congressional Budget Office.

Medicaid in Public Schools

The Individuals with Disabilities Education Act (IDEA), passed in 1988, states that public schools are mandated to provide disabled students with the services that they need. [6] However, federal funding for the IDEA is insufficient. “In 2015, federal IDEA funding covered only 16 percent of the cost to educate children with disabilities, leaving the remaining costs to states and local governments.” [7] Medicaid is crucial for filling in the gap. “Without another source of revenue, states and schools must offset the additional costs associated with special education using general education dollars.” Medicaid provides “reimbursement for health care services that are necessary for students with disabilities to succeed in school.” [8]

Additionally, it isn’t just disabled students that will be hurt by the changes. “In a recent survey of superintendents, almost half reported that they use the reimbursement their districts receive for services provided to Medicaid-eligible children to expand health-related services and supplies.” [9] Medicaid supports disabled students getting the medical and technological support necessary for their education, health, and safety in the school building. But all students benefit from the early-childhood screening, in-school vaccinations, speech therapy and even school nurses that are supported by these funds. 

How Will Medicaid Change Under the AHCA?

In a recent New York Times op-ed, Wharton Professor Ezekiel Emanuel explained that “The Affordable Care Act extended Medicaid to all Americans earning under 138 percent of the federal poverty line — $16,643 for a single person and $33,948 for a family of four in 2017.” [10] The Senate Bill will remove this mandate and most likely cut Medicaid funding by roughly $880 Billion, or 25% percent, over the next decade. [11] Some assert that the plans will not slash Medicaid, but rather restructure it. Republicans argue that systems like block grants will give states more flexibility, but this flexibility would allow states to choose to use money for non-healthcare programs, or even to close state budgets. [12] Senator Bob Casey (D-PA) told NBC10 in an interview that the “benign terminology” was misleading. “Doesn’t [the phrase] block grants sound nice? You’re giving a big grant… But it’ll decimate the program.” [13]

PolicyLab explains that per capita caps, also a method that attempts to offer states flexibility, would allow states to set Medicaid eligibility and options for providing service. [14] These caps would offer pre-determined funding levels set by the federal government that would determine “the limit of reimbursement for each child enrolled in Medicaid based on the average health care cost of a child eligible for Medicaid today.” [15]  However, this option would likely limit how much Medicaid funding each child would receive and “leave insufficient funding for medically complex children” with higher health care costs. [16]

Image: Changes in Medicaid Enrollment Under H.R. 1628, Selected Years. Source: Congressional Budget Office.Image: Changes in Medicaid Enrollment Under H.R. 1628, Selected Years. Source: Congressional Budget Office.

Difficult Decisions for Schools

School districts strapped for cash but still obligated to serve students with disabilities under the IDEA mandate will be floundering in the wake of an AHCA passage. After Medicaid cuts, states will have a few options, which the Kaiser Family Foundation analyzes. The first is to increase state funding for Medicaid to balance federal reductions. This would most likely be achieved through a tax increase. KFF estimates that “If states opt to raise taxes, the median increase in state taxes per resident would range from 3.5% to 8.1%.” [17] Other options include competing with hospitals for Medicaid funding, or restricting Medicaid eligibility or benefits. The final option is to make do with less. Schools would be forced to dip into funds allocated for clubs, sports equipment, and any other budget items deemed nonessential. [18]

In the face of these budget decisions, public school as we know it would disappear. School psychologists, social workers, speech and language pathologists, nurses, and aides could all be at risk, and the crucial services they provide less available. [19] Urban schools, where students are provided with basic health and nutrition services, would be under increased pressure. Rural schools would also be challenged. Children utilize Medicaid at roughly 7% higher rates in rural areas than metropolitan areas, due to lower incomes and workforce participation, along with higher rates of disability. [20] Students who are Medicaid recipients would be hurt the most, but the changes would also impact children from families that never thought of themselves as benefiting from federal aid. With the legislation at hand, there are no communities or children safe from Medicaid cuts. 

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

References

   [1] Spicklemire, Lisette Partelow and Kami. “Proposed Cuts to Medicaid Could Mean Big Cuts to School-Based Health Services.” Center for American Progress. March 24, 2017. Accessed June 18, 2017. https://www.americanprogress.org/issues/education/news/2017/03/24/429032/proposed-cuts-medicaid-mean-big-cuts-school-based-health-services/

   [2] Schubel, Jessica. “Medicaid Helps Schools Help Children.” Center on Budget and Policy Priorities. April 19, 2017. Accessed June 18, 2017. http://www.cbpp.org/research/health/medicaid-helps-schools-help-children.

   [3] Ibid.

   [4] Kim, Rebecca. “How the Wrong Medicaid Reforms Could Devastate Young People with Complex Medical Needs.” Policy Lab. March 29, 2017. Accessed June 18, 2017. http://policylab.chop.edu/blog/how-wrong-medicaid-reforms-could-devastate-young-people-complex-medical-needs

   [5] Valentine, Allison, Robin Rudowitz, Don Boyd, and Lucy Dadayan. “Implications of Reduced Federal Medicaid Funds: How Could States Fill the Funding Gap? - Methods.” The Henry J. Kaiser Family Foundation. March 22, 2017. Accessed June 18, 2017. 

http://www.kff.org/report-section/implications-of-reduced-federal-medicaid-funds-how-could-states-fill-the-funding-gap-methods/

   [6] Spicklemire, Lisette Partelow and Kami. “Proposed Cuts to Medicaid Could Mean Big Cuts to School-Based Health Services.” Center for American Progress. March 24, 2017. Accessed June 18, 2017. https://www.americanprogress.org/issues/education/news/2017/03/24/429032/proposed-cuts-medicaid-mean-big-cuts-school-based-health-services/

   [7] Schubel, Jessica. “Medicaid Helps Schools Help Children.” Center on Budget and Policy Priorities. April 19, 2017. Accessed June 18, 2017. http://www.cbpp.org/research/health/medicaid-helps-schools-help-children.

   [8] Spicklemire, Lisette Partelow and Kami. “Proposed Cuts to Medicaid Could Mean Big Cuts to School-Based Health Services.” Center for American Progress. March 24, 2017. Accessed June 18, 2017. https://www.americanprogress.org/issues/education/news/2017/03/24/429032/proposed-cuts-medicaid-mean-big-cuts-school-based-health-services/.

   [9] Schubel, Jessica. “Medicaid Helps Schools Help Children.” Center on Budget and Policy Priorities. April 19, 2017. Accessed June 18, 2017. http://www.cbpp.org/research/health/medicaid-helps-schools-help-children.

   [10] Emanuel, Ezekiel J., Aaron Glickman, and Emily Gudbranson. “How Republicans Plan to Ration Health Care.” The New York Times. March 07, 2017. Accessed June 18, 2017. https://www.nytimes.com/2017/03/07/opinion/how-republicans-plan-to-ration-health-care.html

   [11] Spicklemire, Lisette Partelow and Kami. “Proposed Cuts to Medicaid Could Mean Big Cuts to School-Based Health Services.” Center for American Progress. March 24, 2017. Accessed June 18, 2017. https://www.americanprogress.org/issues/education/news/2017/03/24/429032/proposed-cuts-medicaid-mean-big-cuts-school-based-health-services/.

   [12] Emanuel, Ezekiel J., Aaron Glickman, and Emily Gudbranson. “How Republicans Plan to Ration Health Care.” The New York Times. March 07, 2017. Accessed June 18, 2017. https://www.nytimes.com/2017/03/07/opinion/how-republicans-plan-to-ration-health-care.html.

   [13] McCrone, Brian X. “‘What Will Happen to Him?’ Families Fear GOP Medicaid Plans.” NBC 10 Philadelphia. March 15, 2017. Accessed June 18, 2017. http://www.nbcphiladelphia.com/news/local/Parents-Medical-Professionals-Mobilize-Against-Republicans-Backwards-Medicaid-Overhaul-416178973.html

   [14] Kim, Rebecca. “How the Wrong Medicaid Reforms Could Devastate Young People with Complex Medical Needs.” Policy Lab. March 29, 2017. Accessed June 18, 2017. http://policylab.chop.edu/blog/how-wrong-medicaid-reforms-could-devastate-young-people-complex-medical-needs

   [15] Ibid.

   [16] Ibid.

   [17] Valentine, Allison, Robin Rudowitz, Don Boyd, and Lucy Dadayan. “Implications of Reduced Federal Medicaid Funds: How Could States Fill the Funding Gap? - Methods.” The Henry J. Kaiser Family Foundation. March 22, 2017. Accessed June 18, 2017. 

http://www.kff.org/report-section/implications-of-reduced-federal-medicaid-funds-how-could-states-fill-the-funding-gap-methods/

   [18] Ibid.

   [19] Thompson, Carolyn, and Sally Ho. “6 ways Medicaid cuts under GOP health care overhaul could impact schools.” PBS. May 15, 2017. Accessed June 18, 2017. http://www.pbs.org/newshour/rundown/schools-congress-cuts-medicaid-spending/

   [20] Hoadley, Jack, Karina Wagnerman, Joan Alker, and Mark Holmes. “Medicaid in Small Towns and Rural America: A Lifeline for Children, Families, and Communities.” Georgetown University Center for Children and Families and the University of North Carolina NC Rural Health Research Program , June 2017. Accessed June 18, 2017. http://www.medicaidforeducation.org/filelibrary-name/webcommittee/Front_Page_News/Rural-health-final.pdf

   [21] Congressional Budget Office. Cost Estimate of H.R. 1628, American Health Care Act of 2017. May 24, 2017. 

https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/hr1628aspassed.pdf

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RESOURCE SPOTLIGHT:

  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>