Medicaid Is More Than Health Insurance—It’s a Lifeline for Public Schools
This post was originally published on July 16, 2025 by Forbes.
Earlier this month, President Trump signed sweeping legislation that included massive cuts to Medicaid, estimated at over $1 trillion over the next decade, an average of close to $100 billion annually. While much attention has been paid to these Medicaid cuts, most people don’t realize the devastating impact these funding cuts will have on schools and students across the country, (including in states where Medicaid operates under different names, like Medi-Cal in California or TennCare in Tennessee). Even fewer understand that many of the cuts are strategically timed to begin toward the end of 2026, after many voters make their midterm election decisions.
When we think about Medicaid, we typically think about health insurance. But Medicaid is also among the largest funding sources for K–12 public schools, providing an estimated $7.5 billion annually to pay for essential services for student learning and development. For the median U.S. school district, Medicaid provides health coverage for over 40% of children.
School districts rely on Medicaid funds to cover speech, physical, and occupational therapies; specialized medical equipment; assistive technologies; and transportation. Medicaid helps to pay for the salaries of school nurses, psychologists, speech therapists, and many others who work directly in our schools. It also helps to fund mental and behavioral health services, which have become increasingly critical as schools respond to rising rates of anxiety, depression, and suicidal behaviors among students. When a 3rd-grader gets reading support for their dyslexia, when a school psychologist provides counseling to a high schooler having a mental health crisis, or when a nurse administers insulin to a middle school student with Type 1 diabetes, it is often Medicaid that pays the bill.
Medicaid’s Role in Student Health and Success
Research on the positive impact of these services is well established. School-based health services have been shown to improve student health, reduce absenteeism in rural communities, and lower health care costs. For children with chronic health conditions like asthma or Type 1 diabetes, dozens of studies have concluded that school-based health services improve both students’ health and their academic outcomes. A number of studies have also found that children served by Medicaid are more likely to be healthy as adolescents and adults, to graduate from high school, attend college, and earn higher wages as adults.
For nearly half of America’s children, Medicaid supports everything from prenatal and postnatal care to preventive health care and glasses when they are needed. One study found that increases in Medicaid eligibility at birth led to improvements in reading test scores in the 4th and 8th grades. Another found a boost in children’s reading scores after their parents became newly eligible for Medicaid coverage.
A recent nationwide survey of 1,440 school district leaders conducted by the Healthy Schools Campaign and its partners reveals the enormous impact of these cuts on schools and students. Among school leaders nationwide, 80% expect reductions and layoffs of school health staff, 70% anticipate cuts to mental and behavioral health services, and 62% foresee reductions in assistive technology and specialized equipment for students with disabilities. Most also pointed to early intervention and preventive services as areas for cutbacks. A district leader in Louisiana, the state that stands to lose the greatest funding, predicted, “Students with disabilities will receive significantly fewer services, which will negatively impact their academic achievement and attendance.”
Rural district educators were even more vivid in their depictions of anticipated outcomes. In Nevada:
We try to intervene as early as possible [with mental and behavioral help to teach them skills and coping mechanisms for future success. If these are taken away, it will cause more classroom interruptions and less success for the overall classroom instruction time. An example: Students with speech issues would lose early interventions. We would not be able to help them, and future success would be harder and create bigger gaps in their reading, math, and social skills for lack of ability to communicate properly.
In Wisconsin:
Medicaid cuts will cause districts to shift focus from students with mental and behavioral health needs since schools cannot manage needs with decreased funds. This will lead to an uptick in absenteeism, disciplinary issues (due to unmet needs), and the need for alternative options. For students with mental/behavioral health needs but without family support, incarceration is more likely. This increases costs to our community.
Even more troubling is that 90% of school leaders predict that Medicaid cuts will force budget reductions across their entire district, not just for health and special education services. Earlier this year, an analysis by the Kaiser Family Foundation showed that federal Medicaid cuts represent 19% of state spending on education per pupil on average (with percentages ranging from 7% to 38%, depending on the state), potentially forcing states to choose between increasing taxes or cutting education funding. The administration’s earlier cancellation of $1 billion in mental health grant funding has already forced districts to lay off mental health professionals and cut training programs, compounding the challenges they face in providing services and making ends meet.
Schools and communities that will bear the heaviest cost are those that already face the greatest challenges: schools in rural areas, schools serving students from low-income families, and families with children with disabilities. Rural schools often serve as the primary health care provider in their communities. They also often pull from limited tax bases, which makes it more difficult to offset the losses of Medicaid funding. As one rural Michigan district official noted in the recent survey, “Due to the remote area we serve, our students have little to no access to medical services other than those provided in schools. Loss of Medicaid funding would severely hamper our ability to support our students.”
Losing Medicaid funding will also mean a significant reduction in both the already inadequately funded system that serves students with disabilities and state and local general education budgets. By law, schools must provide services outlined in students’ individualized education programs (IEPs), regardless of funding. As a result, local communities would have to either raise taxes substantially or cut other educational services to maintain legally mandated special education programs. A school business official from a rural New York district observed in the survey, “Lost revenue on the Medicaid revenue lines would create a domino effect on other services/staffing being provided to regular education students.”
And another in rural Minnesota agreed:
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.
The 2025 budget legislation represents a massive shift that will affect the learning and development of millions of students across every school district in the country over the coming decade. The delayed implementation of many of these cuts—after voters making midterm election decisions in 2026—is no accident. Voters may not yet have seen school nurses laid off, therapy services eliminated, and other cuts to general education programs. For their part, school leaders across the country are already planning for reduced services and potential staffing cuts.
The Broader Costs of Medicaid Cuts
Beyond the funding that will be cut from school budgets, there will be other spillover effects from the recent bill as Medicaid and Medicare cuts, along with loss of tax credits for other insurance, affect families. An estimated 17 million people are estimated to lose coverage as restrictions on enrollment are implemented, and the coverage others have will be less comprehensive, leaving many services unreimbursed. Twelve states have “trigger laws” that would automatically end their Medicaid expansion if federal funding drops below 90%. This would drop coverage for millions more adults and create severe pressure on state budgets.
Furthermore, projected closures of nursing homes and hospitals, particularly in rural areas, will leave families under strain to care for those who are elderly, ill, or disabled, and will reduce access to medical care for entire communities.
Compounding all of these cuts are reductions to the Supplemental Nutrition Assistance Program (SNAP), the federal food assistance program, as the federal government reduces its contribution to SNAP by an estimated $186 billion through 2034. The Center on Budget and Policy Priorities estimates that this will eliminate or substantially reduce food assistance to the families of 1 million children. Further, if students become ineligible for SNAP or Medicaid, they could also lose access to other school-based assistance programs, including free meals, since school districts often use SNAP or Medicaid eligibility to determine eligibility for other programs, such as free and reduced-price lunch.
All of these factors will lead to additional strains on families, with direct impacts on children and schools. As a school business official in a rural Michigan district noted:
When there are strains on families, schools fill in the gaps and swoop in to support the student. Not only would the decrease in direct funding to school programs and personnel impact us, [but] the cuts to our families’ budgets [also] increase the needs at school. Families won’t be able to feed their students, send them with school supplies, provide them with winter attire, etc. We already support families in this way, and cuts to Medicaid will exacerbate this situation, pushing the burden onto schools to fill in the gaps.
When Medicaid funding disappears from schools, it doesn’t just affect individual students; it weakens the foundation of entire communities. These cuts represent more than budget line items—they’re the elimination of school nurses, speech therapists, and counselors who help students every day. If we truly believe in a future where every child can thrive, then protecting Medicaid funding for schools isn’t just policy. It’s a promise we must keep.