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Dropouts Are Driving Up Medicaid Costs, Says New Report

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A new study adds further clout to the idea that dropouts are a national problem, not a personal one—because they cost the medical system money.

Wealthy people are healthy people, more or less. They have the money to pay for health insurance, and get better medicine, and more frequent treatment.

High school dropouts rarely achieve the kind of success that makes them wealthy. They earn less over the course of a lifetime than high school graduates (annually, about a $10,000 difference), and fare even worse against college graduates.

But dropouts don't absorb all their costs. A new report from the Alliance for Excellent Education, "Well and Well Off," released July 10, estimates the medical savings within Medicaid that could have been, if fewer students dropped out of high school.

How much did dropouts cost the Medicaid system? In 2012 alone, about $7 billion. The study also found that high school graduates use Medicaid only 50 percent as much as dropouts.

In 2006, AEE first consulted Peter Muennig, an assistant professor of health policy and management at Columbia University, to analyze the costs of dropouts on state Medicaid costs. But the ongoing implementation of the Patient Accountability and Affordable Care Act renders a full update impossible, so AEE had Muennig calculate potential savings for 2012.

Here's where the Medicaid system could have saved money from dropout prevention, based on areas related to certain health problems:

Reducing the number of high school dropouts would have saved Medicaid up to $7 billion during 2012.

The AEE advocates for more education spending, using the appeal of financial savings in order to woo deficit hawks. The group has a specialty for calculating societal costs of dropouts. A 2009 report indicated that preventing half of the dropouts from the class of 2008 would have contributed over a half-billion dollars in wages to the Los Angeles region of California alone.

Like most news about dropouts, the intention of the study is probably less to surprise than it is to quantify one of the effects of dropping out. Dropout studies should ostensibly spur administrators and policymakers to action, but at this point, it seems more like a casual reminder that dropping out is bad, and not just for the dropout. Plenty is already known about the life of dropouts: bleaker job prospects, exploitation by online education providers, and cyclical poverty for their families. Many dropouts will give school a second chance, but completion rates for those returning still aren't spectacular.

So as helpful as putting a number on a known problem is, it's also worth knowing whether children themselves learn such numbers, and how early. What does your school or district do to stress the long-term value of staying in school? And how does the community work to prevent dropping out?

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