How the GOP’s Healthcare Repeal Would Gut Special Education

Clarification issued on 7/27/2017: Several Trump administration officials have recently claimed that the reduction in Medicaid is not a “cut” because “[w]e don’t see them as cuts.” Politifact ruled this assertion “Mostly False,” as “[the proposals] will leave fewer people eligible for Medicaid. That’s a cut.” As so interpreted, a “cut” applies not only to financial expenditures, but also the number of insured individuals. Thus, this blog has not erred in its reliance on the term “cut(s)” to characterize the GOP's healthcare bills. 

Healthcare and education are among the most contested issues in American politics today. While they are typically considered distinct issue areas in policy debates, the two are considerably interdependent. Inadequate healthcare implicates an inadequate education. The recent vote to repeal and replace the Patient Protection and Affordable Care Act of 2010 (ACA), or Obamacare, illustrate this reality.

Despite repeated failures amidst public furor, earlier this week, on July 25, 2017, GOP Senators successfully voted to begin repealing and replacing the ACA. They voted despite refusing to disclose whether the House or Senate version of the healthcare bill would be enacted. Regardless of the version of the bill they ultimately advance, the disaster wrought on millions of Americans would be similar.

Among a variety of concerning figures (for instance, the projected uninsured rate of Americans to double by 2026 under their plan) Medicaid faces one of the deepest cuts: a projected funding deficit of $834 billion in the House version, and $772 billion in the Senate version. The move would have dire implications for the poor and for disabled Americans, both of whom rely heavily on the federally subsidized healthcare program. It is particularly cruel because the cuts target students receiving special education—a finding noted by the New York Times, Washington Post, and American Civil Liberties Union (ACLU), amongst countless other media and advocacy organizations.

How exactly would cutting Medicaid so acutely impact students’ special education services? The answer lies in a landmark piece of federal legislation called the Individuals with Disabilities Education Act (IDEA). Initially enacted by Congress in 1975 as the Education for All Handicapped Children Act (EHA), and subsequently renamed in 1990, IDEA formally codified the relationship between disabled peoples’ healthcare and education for the first time. Its core principles state that “all children with disabilities … [must be provided] a free appropriate public education [FAPE] which … [is] designed to meet their unique needs … [for] further education, employment, and independent living” (20 U.S.C. 1401(a)(9)).

Medically “related services” under FAPE include, among others: general transportation and aid services, educational counseling, vocational rehabilitation, medical diagnostic services, motility services, audiology services, speech-language therapy, physical therapy, mental health therapy, and early identification and diagnostic assessment. Note that early access to treatment is provided through Medicaid’s “Early and Periodic Screening, Diagnostic and Treatment” (EPSDT) healthcare coverage benefit. Beneficiaries are entitled to treatment until the age of 21. This service is arguably the most important, since medical research clearly indicates that early identification of disorders is necessary to minimize potential achievement gaps.

Healthcare and education walk hand-in-hand because IDEA compels schools to provide necessary healthcare services for students with special needs. However, Congress is not obligated to ensure IDEA’s “related services” are ever fully-funded, since it is a discretionary program. The opposite is true for Medicaid, a mandatory program, which is not subject to annual review by the budgetary appropriations process. Worse yet, IDEA places a hard cap of 40 percent on the amount the federal government may pay each state for its "excess cost" of educating disabled children. In the past 42 years, with one exception, Congress has never come close to funding the IDEA maximum. For FY 2017, it continued to punt the issue by funding only 16 percent ($12 billion) of the excess cost—a 0.70 percent increase from FY 2016 ($11.9 billion) and short of the full-funding commitment by more than 50 percent ($18 billion).

In light of the funding woes above, Medicaid is a necessary and vital bridge to fully fund the IDEA. In 2015, for instance, Medicaid paid more than $4 billion in school-related healthcare services—a paltry 0.73 percent of the $545.1 billion in total Medicaid expenditures that year. Under the current payment scheme, so long as the disabled child is covered by Medicaid, "related services" listed in his individualized education plan (IEP) are covered. Schools provide the service; Medicaid covers it.

The GOP’s primary proposal—shifting Medicaid reimbursement from a “variable fixed percentage” to a “per-capita cap” basis—threatens this entire system. The federal government would no longer provide additional funding for any expense in excess of the cap. States would face the nigh impossible burden of solely addressing the shifted spending risk. To compensate, they may cut Medicaid eligibility, enrollee benefits, and provider benefits. They may also raise taxes, impose work requirements, and charge substantial premiums. None of today’s 74 million Medicaid enrollees would escape unscathed.

Students and their schools would be the worst affected. Since Medicaid expenditures for school-related healthcare services constitute less than 1 percent of its total costs, states are likely to them write off as “waste”—smaller contributions mean lesser influence. As Center for American Progress has noted, significant cuts occurred amidst the Great Recession and even in its aftermath. From 2008 to 2012, many states made up as much as 45 percent of lost state revenue by reducing support for public services, including education, to “balance” the budget. From 2008 to 2016, 46 states spent less per student on higher education than they did before the recession—Arizona and Illinois have hardly recovered, funding less than half of their pre-recession figures.  

Medicaid cuts have clearly affected schools’ ability to pay for even basic services, equipment, and essential staff, and the present circumstances are likely to worsen if the GOP’s healthcare bill is passed. They also affect the millions of people whose sole source of healthcare is Medicaid. For families of children with severe disabilities, such as Down syndrome, the GOP’s proposals will disproportionately target the poor—nearly 75 percent of all such children are from low-to-middle income families, 400 percent below the federal poverty level.  The poor are already less likely to attend and graduate from college, more likely to suffer chronic illnesses, such as obesity and depression, and have reduced life spans. They need more aid, not less.

Healthcare and education are paramount for healthy mental and physical development. Delaying necessary healthcare funding would not only be civically and morally irresponsible, it would be irrational. Expanding coverage—not denying it for the most vulnerable—is a clear step in the right direction, and a policy worth advancing.