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The AHCA and Medicaid: A Harmful Prescription for Nebraska Students

Children need health care in critical developmental years. Medicaid provides this health care for one-third of Nebraska children. Together, Medicaid and the Children’s Health Insurance Program (CHIP) have helped improve health outcomes, reduce child mortality, achieve positive academic gains in the classroom and more. These programs have also helped us make great strides in reducing the uninsured rate among children (5.2% in 2016), progress that is in serious jeopardy under the American Health Care Act (AHCA).

Current proposals to restructure Medicaid through capped payments such as block grants or per capita caps shift at least $834 billion from federal Medicaid budget to states and represent a radical change to the program. What’s more, President Trump’s budget attempts to squeeze an additional $627 billion out of the program. His budget demonstrates the risks associated with Medicaid capped payments: Medicaid funding will become a go-to target for Congress to achieve additional savings for new spending or additional tax cuts now and in perpetuity. 

While we have previously written about these dramatic cuts’ impact on children, we have not focused our comments on specific child populations. This blog post, the first in a series, focuses on the impact Medicaid cuts under the AHCA will impact Nebraska students.

The Individuals with Disabilities Education Act (IDEA) passed in 1975. This landmark legislation held that each student, regardless of disability status, is entitled to a free and appropriate education in the least restrictive setting. Under IDEA, school districts are mandated to provide special education services that are part of individual education program (IEPs) for students who qualify. However, federal funding for special education costs required under IDEA has always been much lower than the need. For example, in 2015 the federal government only covered 16% of the costs to education students with disabilities. Schools must fill this gap with local general education dollars through a policy called “encroachment.”

For the last 3 decades, Medicaid has helped to mitigate encroachment for school districts. School districts currently receive approximately $4 billion each year in Medicaid reimbursements; $26 million of these dollars are spent to provide services to students in Nebraska. These funds reimburse school districts for costs associated with providing a free and appropriate education for students with disabilities as required under law and can range from specialized equipment like wheelchairs to therapies such as speech or physical therapy. In a recent survey of school administrators, 70% of districts surveyed indicated that these reimbursements cover salaries of school health personnel who serve special education students.

Cuts to federal Medicaid funding in the AHCA shift $834 billion to state Medicaid budgets. In the absence of these funds, states will have to pick up the tab or find ways to reduce costs through the rationing of care, reductions to eligibility, decreases in provider reimbursements, or some combination of all three. Schools make up 1% of Medicaid reimbursements overall, which means in a highly competitive financial environment post-AHCA, school districts are unlikely to be able to compete with bigger players such as hospitals and providers for what will be increasingly scarce resources.

With diminishing Medicaid funds under the AHCA and federal requirements in IDEA to provide necessary services to students with disabilities, school districts will have to find funding to meet the needs of these children elsewhere, including raising local tax levies to make up for the loss of funds. As one administrator explained, “The reduction of funding would require the district to utilize funds from other sources to provide the services as mandated under IDEA. The subsequent reduction from other sources would result in elimination of equivalent costing program cuts in “non-mandated” areas of regular education or an increase in local taxes to retain equivalent costing programs.”

Cuts to Medicaid will also intensify the pressure schools face due to encroachment, which means larger cuts in general education funds (not mandated) to subsidize special education students and services (mandated). As another administrator noted, “This funding would have to come out of the general fund, so it hurts all students.”

Currently, schools can also provide Early Periodic Screening Diagnostic and Treatment Benefits (EPSDT) to Medicaid-eligible students to ensure that problems such as poor hearing or poor vision can be addressed before they cause more significant problems both inside and outside the classroom. Other school districts use EPSDT reimbursements to provide much needed but difficult to obtain mental health services. These services are increasingly vital in light of data indicating 37,539 Nebraska children face behavioral health disorders. 20,604 of these kids received mental health or substance abuse services through Medicaid or CHIP. Perhaps even more alarming,14.6% of Nebraska children seriously considered suicide and nearly 1 in 4 Nebraska teens indicated in the last 12 months, they felt sad or hopeless and unable to participate in normal activities for two or more weeks. These important services too are likely to disappear under the AHCA. Schools simply cannot afford to provide these services without Medicaid reimbursements to soften their budgetary impact.

For these reasons, Voices for Children joins groups such as the School Superintendents Association, the National School Boards Association, and the Disability Rights Education and Defense Fund to oppose the American Health Care Act. The AHCA is bad for students, bad for schools, and bad for Nebraska taxpayers.

Contact Senator Fischer and Senator Sasse and tell them to stop cuts to Medicaid and protect Nebraska students!

Call Senator Deb Fischer at (202) 224-6551


Call Senator Ben Sasse at (202) 224-4224

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