Physical and mental health issues can affect children’s ability to succeed at school. Among low-income children with special healthcare needs, about 85 percent do not receive the medical care they require, primarily due to financial constraints and limited access.
School-based healthcare services help to fill this void and studies have shown that increased access to school health providers improves health and academic outcomes, particularly for students with chronic health issues. One of the main ways in which schools can provide this kind of care is through Medicaid, which provides health coverage for about 40 percent of U.S. children. The program is known as Medi-Cal in California.
A new report from the Healthy School Campaign examines the history of Medicaid funding use in schools and releases the results of a survey of nationwide school district leaders on how cuts to the program could harm students.
Since 1988, Medicaid has permitted payments to schools to cover medically necessary services provided to students under the Individuals with Disabilities Education Act (IDEA) and documented in a plan such as an individualized education program (IEP).
“Due to consistent federal underfunding of IDEA, districts rely on Medicaid reimbursement to ensure students with disabilities have access to the supports and services they need,” states the report. “Without Medicaid funding, state and local education funds would be further diverted to cover these costs.”
In 2014, Medicaid began to allow schools to seek reimbursement for all Medicaid-covered health services for eligible students, not just those with an IEP. This allowed schools to offer, and students to access, more preventative screening and treatment services— some of which schools were already providing without being reimbursed. Half of all states bill at least some services provided to Medicaid-covered students.
“Early adopter states have shown that when schools can seek reimbursement for the full array of Medicaid-covered services and providers that work in schools, districts receive more money,” according to the report. “These funds can be reinvested into school health services, including hiring. This makes Medicaid a very important source of funding for school health services — and for state health and education budgets overall.”
What if Medicaid services are reduced?
“House Republicans approved a budget resolution in February 2025 directing the House Energy & Commerce Committee to reduce the federal deficit by a minimum of $880 billion over the next decade,” the report explains. “While Medicaid is not explicitly referenced, budget analysts expect that a significant portion of these cuts would come from Medicaid due to the committee’s jurisdiction of the program.”
In order to assess how reductions in Medicaid coverage will affect local educational agencies, Health Schools Campaign and its partners — The School Superintendents Association, Association of School Business Officials International, National Alliance for Medicaid in Education and Council of Administrators of Special Education — conducted a survey between Jan. 27 and March 3, 2025, which received 1,440 responses be school district staff from all 50 states. Among the respondents, 45 percent identified their school district as rural, with 34 percent as suburban and 17 percent as urban.
Key findings
How school districts use Medicaid funds:
- 86 percent of respondents said their district uses Medicaid funds to support salaries for school health staff and personnel such as school nurses, school psychologists, occupational and physical therapists and speech-language pathologists
- 59 percent use Medicaid funds for mental and behavioral health services
- 46 percent use Medicaid funds for assistive technology and specialized equipment for students with disabilities
How Medicaid cuts would affect school health services and staff:
- 80 percent of respondents expect reductions and layoffs of school health staff and personnel
- 70 percent expect reductions in mental and behavioral health services
- 62 percent expect a reduction in resources, including assistive equipment and technology for students with disabilities
- 73 percent of respondents expect Medicaid cuts would lead to reductions across three or more major areas related to student health
School leaders also worried that cuts to Medicaid would lead to cuts to other parts of the LEA budget. Said one rural Minnesota administrator, “Special education mandates already are not fully funded, so districts must make up the shortfall by drawing from general education budgets. So, reducing Medicaid funding will not only reduce health and educational services needed by children with disabilities, but it will also force districts to draw more revenue from general education, thereby increasing class sizes and negatively impacting educational attainment, staff and student safety and the health of our communities.”
