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Local schools may lose under GOP health-care overhaul

Historic Old Central High School in Duluth. (2016 file / News Tribune)

School superintendents across the country are raising alarms about the possibility that Republican health-care legislation would curtail billions of dollars in annual funding they count on to help students with disabilities and poor children.

School leaders in Duluth, Hermantown and Proctor — voicing concerns about the potential effects on their most vulnerable students — are part of that effort.

For the past three decades, Medicaid has helped pay for services and equipment that schools provide to special education students, as well as school-based health screening and treatment for children from low-income families. Now, educators from rural red states to the blue coasts are warning that the GOP push to shrink Medicaid spending will strip schools of what a national superintendents association estimates at up to $4 billion per year.

That money pays for nurses, social workers, physical, occupational and speech therapists and medical equipment such as walkers and wheelchairs. It also pays for preventive and comprehensive health services for poor children, including immunizations, screening for hearing and vision problems and management of chronic conditions such as asthma and diabetes.

Many school districts, already squeezed by shrinking state education budgets, say that to fill the hole they anticipate would be left by the Republican push to restructure Medicaid, they would have to downsize general education programs that serve all students.

In Hermantown, where Medical Assistance reimbursements were more than $170,000 last year, "any reduction in funding would be a significant loss of revenue for us," said Superintendent Kerry Juntunen.

In order to "meet the needs of our most fragile students," he said, the district would have to spend from its general fund, because those services still need to be provided under state and federal law.

In Duluth, the loss would amount to about $500,000 a year, which would have "a huge impact" on schools, said the district's special services director, Jason Crane.

The money helps support services that "we otherwise wouldn't be able to afford," including mental health services, said Duluth Superintendent Bill Gronseth. "So when we are having conversations about how to serve the whole child, things like mental health are a big part of that, and it's important we have the capability of using Medical Assistance billing."

Filling a gap

Schools have been able to register as Medicaid or Medical Assistance providers, as it's known in Minnesota, and seek reimbursement, as doctors and hospitals do, since 1988. Two-thirds of districts that bill Medicaid use the money to pay the salaries of employees who work directly with children, such as school nurses and therapists.

But the Republican push to overhaul health care would implement a new "per capita cap" system for Medicaid: Instead of matching whatever states spend on Medicaid, the federal government would instead give them a fixed amount for each Medicaid enrollee.

Under the Senate GOP bill, that change would reduce federal spending by about $772 billion over the next decade, according to the nonpartisan Congressional Budget Office. The House GOP version, which passed last month, would cut federal spending $880 billion over the same time period.

Republican proponents argue that controlling federal spending would force the health-care system to become more efficient in providing services. A spokesman for Senate Majority Leader Mitch McConnell, R-Ky., referred a request for comment to the office of Sen. Orrin Hatch, R-Utah, chairman of the Finance Committee.

Katie Niederee, a spokesperson for the committee, said that the bill "reflects Republican priorities to bend the cost curve on federal entitlement programs and encourage states that tend to spend beyond their means to actually stay within their budget."

Democrats say they believe that the nation's neediest will be denied essential services — including in schools.

"No matter how they try to spin their massive cuts to Medicaid to make the Senate version look less 'mean,' it is clear that Trumpcare would mean massive cuts to schools and districts and massive pain for students and families," said Sen. Patty Murray of Washington, the top Democrat on the Health, Education, Labor and Pensions Committee.

The Senate bill, known as the Better Care Reconciliation Act, exempts some of the most disabled children from the per-capita caps, but the number of children who would be affected is not known. Education advocates say that whatever the exact number, schools will be in the same pinch.

"Health care will be rationed and schools will be forced to compete with other critical health-care providers — hospitals, physicians, and clinics — that serve Medicaid-eligible children," a coalition of more than 60 education, civil rights and child-welfare groups wrote to senators on Tuesday, urging them to reject the GOP legislation because of the impact on schools.

The Republican plan for Medicaid is likely to hurt schools in several ways, said Sasha Pudelski, who tracks health-care policy for AASA, the superintendents' association. Most directly, states may decide to prohibit schools from receiving Medicaid dollars because of what is likely to be stiff competition for limited resources, she said.

Less directly, states struggling to cover health-care costs now covered by the federal government would have to seek cuts elsewhere in their budgets, including in education, which accounts for a large share of many states' spending.

"The kids who will be hurt first and foremost are special ed kids and kids in poverty, but then everybody will be hurt, because we'll have to shift dollars from the general education budget," she said.

Schools receive less than 1 percent of federal Medicaid spending, according to the National Alliance for Medicaid in Schools. But federal Medicaid reimbursements constitute the third-largest federal funding stream to public schools, behind $15 billion they receive each year for educating poor children and $13 billion they receive to educate students with disabilities under the Individuals with Disabilities in Education Act (IDEA).

The federal government initially promised far more financial support for IDEA, the four-decade-old law that outlines schools' obligations to educate students with disabilities. Congress pledged to pick up 40 percent of the cost of special-education services under the law, yet has never come close. It now pays only about 15 percent.

Medicaid payments have helped fill that gap.

'A huge, negative impact'

In Proctor, where the district is reimbursed about $100,000 a year on average for services it provides, the money often helps pay for the care of severely disabled kids — care that can be very expensive, said Superintendent John Engelking.

"Truly, the gauge of a compassionate government is how they treat their most vulnerable, and taking away Medical Assistance certainly will have a huge negative impact on our public schools," he said.

The effect of the overhaul on kids outside of schools would also be substantial, said Jenny Peterson, executive director of Generations Health Care Initiatives in Duluth.

"For three quarters of this last year 29 percent of anyone we enrolled through MNsure were children," she said, which includes Medical Assistance. "Any repeal or cutback of Medical Assistance will certainly hurt those who are most vulnerable."

In Duluth, about $8 million of its general fund is already used to pay for special education services required by state and federal mandates but not covered in their allotted funds. Some of the services paid for with Medical Assistance are for kids with complex needs such as tube-feeding and catheterization. That money is used to train staff to help students with eating and other personal care.

There are times when such school staff have probably helped save lives. Duluth enrolls some students with "significant seizure disorders, who wear helmets, because their seizures come on so rapidly they just drop," said school nurse Susan Sederberg.

Special medication must be given when that happens, and it needs to happen faster than the time it takes an emergency response to arrive, she said. There have been recent instances of that.

Even if the funding is no longer available, the state of Minnesota still requires that schools provide services under the federal special education law, said Deanna Gronseth, who works in the special services department in Duluth.

"It would almost become an unfunded mandate," she said. "We have to and want to continue providing services to children; this allows kids with medical needs to fully access their instruction in the school system. We just won't be having the revenue coming in to help support it. So what every state is wondering is, would the states start having to pick up that money or would the local districts have to?"

News Tribune staff writer Jana Hollingsworth contributed to this report.