Public health insurance and special education enrollment

Children with disabilities face substantial hurdles in obtaining education. Special education (SE) can potentially improve outcomes for these children, but identifying and providing services to eligible students is problematic, particularly for low-income children and children with “invisible” or “malleable” disabilities like dyslexia, anxiety, or ADHD. At the same time, there is no consensus that SE enrollment is uniformly positive. There are concerns about stigma, bias in the process, and the impact of expanding SE budgets on general education funding. Exploiting variation in expansions to Medicaid eligibility by state, year, and age, we find that increases in Medicaid eligibility generated increased average rates of SE enrollment, with effects concentrated among elementary school children, those with malleable disabilities, and those for whom Medicaid expansions were on the intensive margin (gaining additional years of Medicaid eligibility) rather than in the extensive margin (gaining initial eligibility for Medicaid). At the same time, however, children who had more early childhood Medicaid eligibility before they started elementary school were less likely to be enrolled in SE than their peers, implying that gaining access to Medicaid in early childhood generated access to screening and treatment that reduced the need for SE support in elementary school. Because federal law requires that Medicaid be the primary payer to schools that provide SE services, the estimates suggest that by dramatically reducing SE enrollment among those with more early childhood Medicaid eligibility and by modestly expanding SE enrollment on the intensive margin, Medicaid expansions likely mitigated the impacts of SE spending on general education budgets.