NCPA - National Center for Policy Analysis

Medicaid Funds Going To Schools

January 2, 1996

Few are aware of it, but hundreds of millions of Medicaid dollars are being spent on education. The Omnibus Reconciliation Act of 1989 opened the window for schools to claim Medicaid reimbursement for special education services. Medicaid's annual costs, which are paid by state and federal funds, have rocketed from $51 billion in 1988 to $58 billion in 1995.

  • It is estimated that more than $200 million in Medicaid funds are channeled to school systems each year for hiring teachers, maintaining property and buying supplies.
  • School systems with large enrollments of Medicaid-eligible students are paid under a program known as Early and Periodic Screening, Diagnosis and Treatment services.
  • Some school districts are said to be "confused" as to what qualifies as medical services versus administrative expenses.
  • An official of the federal Health Care Financing Administration, which administers Medicaid, admitted she really doesn't know how the funds are being used by school districts.
  • A recent report disclosed that $28 million a year in Medicaid funds was placed in the general fund of the Chicago school system and has been used for a variety of functions.

Source: Joyce Price, "Millions from Medicaid Help Fund School Systems," Washington Times, January 2, 1996.


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