On July 4, 2025, President Trump signed H.R.1 into law, resulting in significant changes to Medicaid eligibility and the largest Medicaid cuts in history. With H.R.1’s new Medicaid work requirement and eligibility re-determinations, it is estimated that between 4.9 and 10.1 million people could lose Medicaid coverage in 2028. Many people will lose coverage not because they are no longer qualified, but because they are unable to navigate the complexity of Medicaid requirements and administrative hurdles.
Although H.R.1 primarily targets Medicaid eligibility for adults, coverage disruptions can impact families. When parents lose Medicaid coverage or struggle to navigate the complexity of Medicaid requirements, eligible children can fall through the cracks, making it harder and slower for them to gain Medicaid coverage. Increased paperwork, missed notices, and system errors can disrupt children’s coverage, potentially leading to 1.5 million children losing coverage due to administrative errors. The gaps in coverage could lead to downstream consequences for children including delayed diagnoses and missed preventive care appointments.
Yet, the effects of the policy extend far beyond the health care system and into America’s schools. For schools, Medicaid is a sustainable funding stream that supports nursing services, mental health care, speech therapy, and other health services that allow students to thrive in the classrooms. With the recent expansion of school Medicaid programs, it is critical to understand the potential implications of H.R.1 on school health services and school Medicaid programs.
School Medicaid: A Critical Investment in Student Health
School Medicaid is critical to meeting students’ growing physical and mental health needs. Medicaid allows schools to expand access to care, better manage students’ chronic conditions, and provide early interventions. The reversal of the Free Care Rule supports these efforts by enabling schools to offer health services to non-IEP, Medicaid eligible students. It is estimated that Medicaid provides over eight billion dollars annually in state and federal spending to support school health services. Additionally, school Medicaid expansion is associated with an increase in the receipt of school health services among children with parental opioid use disorder. The expansion of school Medicaid creates opportunities for school districts to better meet student health needs by reducing barriers to care and ensuring timely access to critical services.
Implications of H.R.1 on School Medicaid
The implementation of H.R.1 could produce the “unwelcome mat” effect, causing eligible children to lose coverage or fail to enroll when their parents lose coverage despite being eligible for Medicaid. Although H.R. 1 does not directly cut funding for schools, the potential coverage losses and funding reductions could have significant downstream effects on schools and students. Funding for school Medicaid programs depends on the number of students enrolled in Medicaid. If Medicaid enrollment decreases, schools may receive less Medicaid reimbursement to support school health services. Additionally, Medicaid enrollment is also linked to other federal assistance programs such as the Free School Lunch program. Any decline in Medicaid enrollment among students can drastically decrease funding for critical programs that keep students healthy.
Potential reductions in school Medicaid funding could place significant pressure on school districts to make difficult decisions regarding school nurses, mental health support, and direct health services, limiting students’ access to essential care. According to a nationwide survey of more than 1,400 school district leaders, 90 percent of respondents expected Medicaid cuts to reduce their district’s budget, 80 percent expected reductions in school health staff, and 70 percent expected reductions in mental and behavioral health services. These reductions could directly harm student well-being and safety, further exacerbating the ongoing mental health crisis affecting children and adolescents.
Recommendations for State and School Leaders
Proactive action is needed to support our most vulnerable children amid federal Medicaid cuts and ongoing changes to Medicaid eligibility. To preserve Medicaid funding in schools, state leaders may expand school Medicaid programs to maximize Medicaid reimbursement and allow schools to bill for administrative activities such as conducting outreach to ensure eligible students are enrolled in Medicaid. Schools can take advantage of this opportunity to help families navigate the changes introduced by H.R.1 and avoid unnecessary loss of Medicaid coverage. For states that rely on Medicaid enrollment to allocate funding for federal programs, state leaders should consider developing more holistic indicators of student need to mitigate the effects of declining Medicaid enrollment and undercounts resulting from H.R.1.
Students should never bear the consequences of funding cuts. State and school leaders must ensure that funding reflects student need, not paperwork status, and take actions to protect and expand school Medicaid and school health services.