Medicaid isn’t just for hospitals—it’s education infrastructure

Most Americans think of Medicaid as a health program. It covers doctor visits, hospital stays, and prescriptions for low-income families. But one of Medicaid’s least visible and most vital roles lies far from clinics and hospitals: inside public schools.

For decades, Medicaid has quietly helped schools pay for nurses, physical therapists, mental health counselors, and other specialists that support student well-being. These services don’t just keep children healthy—they help them stay in school, learn, and thrive. In many districts, especially underfunded ones, Medicaid funding makes the difference between having a school nurse or not. And yet, this critical function of Medicaid often goes unrecognized in public debates about health reform or budget cuts.

If proposed changes to Medicaid’s structure—such as federal funding caps or block grants—move forward, schools across the country could lose a significant source of support. And it wouldn’t just hurt the most vulnerable students. It would compromise services that benefit entire school communities, from emergency care to disability services to behavioral health support.

This is why educators, administrators, and families are raising the alarm. Medicaid may be a health program on paper. But in practice, it’s also a backbone of public education.

Since 1988, schools have been able to receive Medicaid reimbursement for providing health services to eligible students. These are typically students enrolled in Medicaid who require services under the Individuals with Disabilities Education Act (IDEA), which mandates that schools provide appropriate support for students with disabilities.

What kinds of services qualify? The list is broad and growing. It includes:

• School nurses who manage chronic conditions like asthma or diabetes
• Speech-language therapists for students with communication challenges
• Physical and occupational therapists for students recovering from injury or managing disability
• Behavioral health counselors who support students experiencing trauma, anxiety, or behavioral disorders
• Specialized transportation for students with mobility limitations

These services are often integrated into students’ Individualized Education Programs (IEPs), meaning schools are legally obligated to provide them. Medicaid allows schools to recoup part of the cost—if they can navigate the complex billing requirements and documentation processes.

In 2022, schools received more than $4 billion in Medicaid reimbursements, according to federal data. That may sound like a large number, but it represents a small fraction of national Medicaid spending. And for schools, every dollar counts.

Without Medicaid reimbursements, many districts—especially those serving lower-income or rural populations—would struggle to fund these essential services from their general education budgets. This could lead to larger class sizes, reduced counseling staff, or cuts to arts and enrichment programs to cover mandated special education costs.

While Medicaid supports all eligible students, its impact is most visible in under-resourced communities.

Rural school districts often operate with thin budgets and limited access to nearby healthcare providers. A school nurse may be the only medical professional many children see regularly. Similarly, urban schools serving large populations of low-income families may have high rates of Medicaid-eligible students who need physical or mental health support.

These schools don’t just use Medicaid funding as a supplement—they rely on it to fulfill legal and moral obligations. Without it, schools are forced to make trade-offs: pulling funds from classroom instruction, teacher salaries, or facilities upkeep to pay for health staff and services they are required to provide.

When people say “kids can’t learn if they’re not healthy,” this is what they mean. Asthma that goes unmanaged leads to absenteeism. Trauma left unaddressed leads to disruptive behavior and disengagement. The school-based supports that Medicaid enables are not optional extras—they are foundational to learning.

In recent years, the role of Medicaid in school-based mental health care has grown significantly.

With rising rates of youth anxiety, depression, and behavioral health issues, schools have become the frontlines of early intervention. According to the National Survey of Children’s Health, nearly 1 in 5 children in the U.S. has a diagnosable mental health disorder, but only about 20% of those children receive care from a specialized mental health provider.

School-based mental health services fill this gap. Medicaid reimburses for licensed counselors, social workers, and psychologists who deliver services directly at school. This reduces transportation barriers, stigma, and wait times that often delay or prevent children from accessing care.

The evidence is clear: when students can access mental health services at school, they’re more likely to engage in class, improve behavior, and show up consistently. These outcomes matter not just for individual success, but for school performance metrics like attendance and graduation rates.

And yet, these services are highly dependent on Medicaid as a funding mechanism. Districts cannot replace these dollars easily—especially when federal education funding has remained flat or declined in real terms.

Several recent federal budget proposals have called for imposing block grants or per capita caps on Medicaid. While these may sound like abstract fiscal measures, their practical impact on schools could be severe.

Currently, Medicaid operates as an entitlement program—states receive federal matching funds based on the actual number of eligible people and services provided. If more children enroll or more services are needed, federal support scales accordingly.

Block grants and caps, by contrast, would set a fixed amount of funding regardless of enrollment or service levels. This effectively shifts risk from the federal government to states—and by extension, to school districts.

In periods of rising need—such as a mental health crisis or post-pandemic recovery—schools could find themselves constrained by a capped funding environment. They would still be legally required to provide services under IDEA, but without additional Medicaid support, they would have to absorb the costs themselves.

This isn’t hypothetical. The Congressional Budget Office (CBO) has modeled scenarios where Medicaid caps could reduce federal Medicaid funding by over 25% in the next decade. States would either have to backfill the shortfall or cut services. Education budgets are often the first to feel the pinch.

Some states are exploring ways to expand Medicaid’s reach in schools. For example, Colorado and Michigan have obtained federal approval to allow schools to bill Medicaid for services provided to all students, not just those with IEPs. This opens the door to broader behavioral health services and preventative care that benefit entire student populations.

These changes reflect a growing recognition that health and education outcomes are intertwined. A child who can manage their ADHD with therapy is more likely to succeed in school. A student with undiagnosed hearing loss who gets screened and fitted for a hearing aid is more likely to participate and engage.

But these reforms depend on a strong federal Medicaid partnership. If the foundation is weakened by budget cuts or funding caps, states may pull back or hesitate to invest in innovative programs.

The result? A reversion to patchwork services, inconsistent coverage, and inequitable outcomes between wealthier districts and those with higher Medicaid enrollment.

If Medicaid funding were significantly reduced or restricted, here’s what many schools could lose:

• Full-time school nurses: Some districts already share one nurse across multiple campuses. Funding cuts could eliminate these positions entirely.
• On-campus mental health care: Students would have to rely on off-site services with long waitlists—if they can access them at all.
• Special education therapists: Schools might struggle to provide federally required physical, occupational, or speech therapy in a timely manner.
• Crisis response capacity: Nurses and counselors often serve as first responders in emergencies like seizures, asthma attacks, or student mental health crises.
• Training and administrative support: Medicaid reimbursements also fund staff training, documentation systems, and compliance efforts that enable schools to deliver services legally and effectively.

This isn’t about losing a “bonus” service. It’s about undermining the very conditions that make learning possible—particularly for the most vulnerable students.

Unlike the U.S., many developed countries fund school health services through centralized education or public health systems. For example, the UK’s National Health Service (NHS) employs school nurses directly through regional health authorities. In Nordic countries, child health is often integrated into education systems from preschool through secondary school.

These models have their own strengths and challenges. But they share one key feature: stable, universal access to school health services, untethered from insurance eligibility or Medicaid billing capacity.

In the U.S., school-based Medicaid funding reflects a different political and fiscal reality. It's a workaround that delivers real value. But it’s also a fragile system—one that depends on federal-state cooperation, administrative capacity, and political will.

When families hear about proposed Medicaid cuts, they may not immediately connect the dots to their child’s school experience. That’s a communication failure—not a policy one.

Medicaid funding for schools is one of the few policy bridges between health and education that works. It channels federal resources directly into the environments where children learn. It reduces absenteeism. It supports inclusion. And it makes schools more capable of meeting the needs of every student—not just those with means.

Cutting Medicaid isn’t just about changing a health program. It’s about reshaping public infrastructure that enables learning. So the next time we talk about Medicaid reform, we should stop asking, “How much does this program cost?” and start asking, “What happens to our schools if it disappears?”

Because when Medicaid dollars leave the classroom, so does something far more valuable: opportunity.