The Effects of Medicaid Coverage for School-Based Health Services on the Supply of School-Based Healthcare Clinics: Evidence From the “Free Care Rule” Reversal and FQHCs

Objective

To determine whether Medicaid coverage of healthcare services provided within schools affects the supply of school-based health clinics.

Data Sources and Study Setting

We combine nationwide data spanning 2012–2020 on Federally Qualified Health Centers delivering health services within school settings with state policy information on Medicaid expansion to school-based healthcare.

Study Design

Until 2014, the federal “Free Care Rule” restricted school-based health centers from using Medicaid funding to provide health services unless these services were part of the student's Individual Education Plan. In 2014, the Centers for Medicare & Medicaid Services reversed the free care rule, allowing states to opt in to authorizing Medicaid reimbursement for comprehensive health services delivered in schools to Medicaid-enrolled students. We compared the number of federally qualified school-based health centers in states that expanded their Medicaid policies in response to the free care rule reversal to that of states that did not expand their Medicaid programs to reimburse for school-based health services in a staggered difference-in-differences analysis. We also adjusted the analysis for other important measures that may independently affect school-based healthcare provision and funding decisions.

Data Collection

The number of health centers delivering services in schools comes from the Health Resources & Services Administration. State Medicaid coverage policy information comes from the Healthy Schools Campaign.

Principal Findings

Expanding Medicaid coverage to comprehensive school-based healthcare increased the number of Federally Qualified Health Centers providing services in school settings by about 13.42 (p = 0.035, 95% CI: 0.94, 25.90). This increase represents a relative rise of 39%. However, these results are sensitive to specifications.

Conclusions

Local educational entities, school health providers, and public health professionals are responsive to financial incentives to provide services to Medicaid-enrolled children within schools. Recent federal legislation has the potential to increase financial incentives and offer complementarities to prior state-level policy changes.