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Here's What the Latest Push to Repeal Obamacare Could Mean for Schools

Educators who thought Congress would leave schools alone and not pass a big health care overhaul any time soon might want to reconsider. 

Senators are making one more push to end President Barack Obama's signature health care law before Sept. 30. The legislation now getting the attention has Sen. Bill Cassidy, R-La., and Sen. Lindsey Graham, R-S.C., as the lead co-authors. After Sept. 30, the Senate would in practice have to pass any repeal of Obamacare with 60 votes, which is all but impossible politically given that Republicans control only 52 seats in the chamber. So time is short for this latest GOP effort to send an Obamacare repeal bill, even though some are skeptical that it's a "true" repeal of the ACA, to President Donald Trump.

Like previous recent efforts to overhaul health care and ditch Obamacare, the Graham-Cassidy legislation would significantly impact the $4 billion in Medicaid money schools receive annually. That dollar amount makes Medicaid the third-largest source of federal funding for K-12, and covers some special education costs as well as other services. School advcoates worked to defeat the last GOP attempt to repeal the ACA over the summer.

The bill would convert the federal government's current Medicaid funding structure into a block grant for states. Supporters say that this would allow states more flexibility in how they use Medicaid money, and would make the distribution of federal health care money more equitable than under the ACA.

"This proposal removes the decisions from Washington and gives states significant latitude over how the dollars are used to best take care of the unique health care needs of the patients in each state," Cassidy said in a statement on his website regarding the bill, which has the support of House Speaker Paul Ryan, Gov. Scott Walker of Wisconsin, and others. 

However, in an analysis, Fitch Ratings points out that the block grants for Medicaid created by the Graham-Cassidy bill would be eliminated entirely after 2026, and notes that this possibility "poses a fiscal cliff risk for states, although one for which states would have time to prepare." The legislation would also end the Medicaid expansion enacted by the ACA. And beginning in 2025, it would increase the per-capita cap on Medicaid spending for children based on general inflation, which is below the rate at which the actual Medicaid costs for children are expected to grow, according to an analysis by the Center on Budget and Policy Priorities, a left-leaning think tank in Washington. That group pegs the possible Medicaid funding cut at about $300 billion in 2027, with smaller annual cuts in prior years:

MedicaidGrahamCassidy.PNG

Sasha Pudelski, the assistant director of AASA, the School Administrators Association, worries that if Graham-Cassidy becomes law, schools will get squeezed by states that would put more of a priority on directing scarcer Medicaid dollars to front-line providers like hospitals. Fitch notes that Medicaid spending accounts for one-third of states' total budgets. 

"It's improbable that states can maintain spending as they can currently ... including for school districts," Pudelski said. 

Although schools only get about 1 percent of Medicaid dollars, for some states the impact can be big. Texas schools, for example, get $444 million in Medicaid cash, according to Pudelski's group, and $250 million of that comes from the federal government

Ultimately, she said that in this key respect, the newest legislation is similar to previous recent Obamacare-repeal efforts from the GOP that would make significant cuts to Medicaid. 

As for the chances that it passes?

"Given that it came down to one vote last time, and the same people are there, we have to take this super seriously," Pudelski said.

AASA recently joined several other education groups on a letter urging Congress to reject the bill. Read that letter below:


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