How Medicaid became a go-to funder for schools

Begun as a healthcare safety net, Medicaid increasingly underwrites a range of services in America’s public schools

Published March 10, 2018 9:59AM (EST)

  (<a href=''>diane39</a> via <a href=''>iStock</a>)
(diane39 via iStock)

This article originally appeared on Kaiser Health News.

OAKLAND, Calif. — Gerardo Alejandrez used to punch classmates, throw chairs and curse at his teachers, conduct that forced him to switch from school to school. “I had a lot of anger issues,” the 16-year-old said recently.

Then Gerardo entered a class at Oakland Technical High School for students who have mental health or behavior issues. In that classroom, the teacher gets support from Erich Roberts, a psychiatric social worker assigned to the group. Oakland Unified School District bills Medicaid, the nation’s insurance program for low-income residents, for Roberts’ services.

Those payments officially cover the time he spends — in and out of the classroom — providing therapy and other assistance for nine Medicaid-covered youths as well as meeting with their family members. Roberts’ presence in the classroom is also an asset for the teacher and four other kids in the class who are not on government insurance. Many of the students in the class would likely drop out without the extra help, Roberts said.

Medicaid, created in 1965 to provide health insurance to the poor, now functions as a lifeline for millions of American students such as Gerardo — whose grades have improved and who wants to become a fashion designer — as well as hundreds of school districts across the country like Oakland Unified. The public insurance program has evolved so that it now finances myriad education-related services, including transportation for kids with disabilities, school clinics and counseling for children from turbulent backgrounds. Medicaid funds are now woven into the nation’s educational system.

But as Congress seeks to cut federal health spending, the use of Medicaid dollars in schools could come under new scrutiny. Critics question whether schools are the best entities to provide all the services they now do, and if the educational system has become too reliant on the health program. Educators and advocates counter that schools are the opportune place to address health-related issues and that federal law requires them to provide such benefits. And, they say, if Medicaid doesn’t pay, who will?

With a Republican administration vowing to trim Medicaid, Kaiser Health News is examining how the U.S. has evolved into a “Medicaid Nation,” where huge swaths of Americans rely on the program, directly and indirectly, often unknowingly. Medicaid’s role in schools is a telling example.

Medicaid spends only $4 billion of its $400 billion annual budget in schools — a “very small portion of the pie,” said Jessica Schubel, a senior policy analyst at the bipartisan Center on Budget and Policy Priorities. But for the school districts providing an array of services that have quietly become vital to students and families, losing this funding source would be immense, she said, “a big deal.”

An Expanded Purview

The exact nature of the consequences would depend largely on the state and school districts, as jurisdictions deploy Medicaid funds differently. Since states must contribute a portion of total Medicaid funding to the federal allocation, the amount of money available for school district spending is in part determined by statehouse politics.

Generally, the federal program can help districts provide a variety of services, staff and equipment for their students. Although not all districts tap into funding, Medicaid will reimburse districts for in-school vision and hearing exams, occupational therapy for special-education students, even diabetes and asthma management. It covers wheelchairs and other medical devices so a student can attend class. In Oakland Unified School District and others around the nation, Medicaid also supports mental health services.

In 2017, a survey by the School Superintendents Association found that 68 percent of superintendents said Medicaid dollars funded school nurses, counselors and other health staff members. More than half of superintendents said they have worked to expand the number of students enrolled in Medicaid, which can increase revenue to the school districts. The funds also enable districts to pay staff salaries like Roberts’, buy medical equipment and generally bolster their education budgets, Schubel said.

But some critics of Medicaid, notably political conservatives, question how funds flow into school districts and whether educators have wrongly plumbed the program to cover budget shortfalls. They argue that because the districts already receive other sources of federal funding for special-education and health services in schools, they don’t need federal Medicaid dollars to pay for them.

Lindsey Burke, director of the Center for Education Policy for the Heritage Foundation, a conservative think tank, argues that Medicaid expenses overall are growing too quickly. She said changes are needed to allow states and districts more flexibility and to reward “sound choices” about what to deliver using Medicaid money.

“Medicaid requires that poor children’s health care be covered, but does not prescribe that such coverage be delivered by school districts,” Burke said.

In the past, the government penalized some school districts for straying far afield from intended purposes. Ten years ago, federal investigators uncovered improper billing for school-based Medicaid services, and cases of waste and fraud in Texas, Massachusetts and New York. Dollars meant for medical care were used for children’s transportation or school officials’ salaries or benefits. Texas, in particular, was found in 2007 to have submitted close to 300 incorrectly coded claims, resulting in nearly $19 million of federal payments for costs not allowed under Medicaid’s in-school services program.

Schubel of the Center on Budget and Policy Priorities, who has studied Medicaid in schools, emphasized that school administrations are in the business of providing education — they are not in the business of providing medical services.

By Anna Gorman

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