Congress Approves $930B in Medicaid Cuts—Schools Brace for Impact

In a narrow 218-214 vote on July 3, the House passed the final version of the One Big Beautiful Bill Act (H.R. 1), enacting devastating Medicaid cuts that will impact school health services, especially in rural communities. Despite Republican control, Reps. Thomas Massie (R-Ky.) and Brian Fitzpatrick (R-Pa.) joined Democrats in opposing the bill.

This change has been decried by special education advocates, calling Medicaid services such as speech therapy and physical rehabilitation “life-saving,”  emphasizing that cuts would disproportionately harm students with disabilities, mental health needs, and those in rural or low-income areas.

Districts are warning that because many of these services are legally mandated, districts will have to cover the cost in other ways, either by raising local taxes or cutting other programs. The ripple effects of these decisions could strain entire communities.

The One Big Beautiful Bill includes roughly $930 billion in Medicaid cuts over the next decade. It retains and expands several significant policies, including mandatory work requirements, more frequent eligibility redeterminations, and structural changes that reduce federal funding to the states. According to the Congressional Budget Office (CBO), these provisions, along with others affecting eligibility for Affordable Care Act programs, could result in 11.8 million people losing health insurance coverage, including more than 10% of the current Medicaid population.

Reactions from Unions, Legislators, and Advocates

The reactions were swift from teacher unions, Democratic legislators, and the special education community, with vows of fighting the impending cuts.

“They’re not just slashing budgets—they’re taking food away from hungry children by cutting SNAP. They’re stripping health care from millions by dismantling Medicaid. This isn’t just irresponsible—it’s a complete betrayal of America’s students, families, and core values,” said Becky Pringle, NEA President. “Educators and parents will not stand by in silence as Trump terrorizes our communities. We will speak out, organize, and fight back because we know what is at stake. Our students deserve better. Our families deserve better. And we will not rest until every student—no matter their background or ZIP code—has the opportunity to learn, grow, and thrive.”

“Medicaid, for its part, funds much needed school-based health services, reimbursing schools for services provided to students with disabilities and low-income students.” The Education Law Center remarked after the passage of the Big Beautiful Bill Act. “The loss of these critical benefits is devastating.”

With those in healthcare repeating the magnitude of the cuts to Medicaid.

“Today is an extremely disappointing and very difficult day for health care in America. Despite months of clearly demonstrating the implications that these Medicaid proposals will have on the patients and communities we serve, especially the most vulnerable populations, Congress has enacted cuts of nearly a trillion dollars to the Medicaid program, said American Hospital Association President and CEO Rick Pollack. “No matter how often repeated, the magnitude of these reductions — and the number of individuals who will lose health coverage — cannot be simply dismissed as waste, fraud, and abuse. The faces of Medicaid include our children, our disabled, our seniors, our veterans, our neighbors, and friends. The real-life consequences of these reductions will negatively impact access to care for all Americans.”

In contrast, many Republicans, including President Donald Trump, praised the passing of the bill.

“I think when you over the bill, it was very easy to get them a Yes… Biggest tax cut in history, great for security, great on the Southern border,” said Trump before he got on his plane to travel to Iowa. “We covered just about everything. Again, it’s the biggest bill ever signed of it’s kind.”

“Today’s passage of the budget bill is a win for Utah families: it delivers meaningful tax relief, invests in energy abundance,” Utah Gov. Spencer Cox wrote. “And, thanks to bipartisan teamwork, preserves every state’s freedom to craft commonsense AI safeguards.”

In a speech on the House floor, House Speaker Mike Johnson (R-La.) asserted that the bill would make the United States “stronger, safer, and more prosperous than ever before.”

The History of Medicaid

Medicaid is a critical program that provides healthcare coverage to over 70 million Americans, including children, individuals with disabilities, and those requiring long-term care services. Medicaid funding also supports behavioral health services and substance use disorder treatment, ensuring access to essential care for vulnerable populations. The program is crucial to ensuring that students receive necessary healthcare services, such as occupational therapy, and it supports individuals who may not have other options for health insurance.

Since 1988, Medicaid has allowed schools to receive reimbursement for medically necessary services provided to students with disabilities under IDEA. With chronic underfunding of IDEA, many districts depend on these funds to support students. In 2014, CMS expanded eligibility, enabling schools to bill for services provided to all Medicaid-enrolled students—not just those with IEPs. As a result, 25 states now bill Medicaid for services like nursing care and school-based counseling.

Survey with District Leaders

In new national survey conducted of school district leaders collected 1,440 responses from superintendents, health officials and school administrators highlighted the potentially devastating impact of proposed Medicaid cuts on student health services, school staffing, and local communities—particularly in rural areas where schools often serve as the primary access point for healthcare.

Key Findings Nationwide:

• 86% of districts use Medicaid to fund salaries for school health personnel (e.g., nurses, psychologists, occupational and speech therapists).
• 59% use Medicaid to support mental and behavioral health services.
• 46% depend on it for assistive technology and specialized equipment for students with disabilities.
• 80% expect staffing reductions if Medicaid is cut.
• 70% anticipate cuts to mental and behavioral health services.
• 62% expect a reduction in health-related resources and equipment.

Medicaid’s Critical Role in Rural School Districts:

While schools nationwide would suffer, rural districts are expected to be hit the hardest. The majority of survey responses came from staff in rural communities, where schools frequently fill healthcare gaps due to limited medical infrastructure.

• 86% of rural respondents said Medicaid funds support school-employed health professionals (SISP).
• 79% reported that cuts would force staffing reductions.
• 68% said mental and behavioral health services would be reduced.
• Rural districts were slightly more likely than urban and suburban districts to report that cuts would reduce access to preventive care and screenings, showing how vital schools are to health delivery in underserved areas.

“This will be a devastating loss to all our students, especially our students with special needs,” one rural district leader shared.

While the impact is just now starting to be felt, Superintendents across the country warn that cutting Medicaid is, in effect, cutting school budgets.

The bill is expected to be signed on July 4 at 5:00 p.m. at the White House.