Medicaid Cost For Autism – The Impact Of Special Education Funds

Executive Briefing | by | July 14, 2017


Athena Mandros
Athena Mandros

A couple of months ago, my colleague Monica E. Oss wrote a piece on the size of the adult population with disabilities and the high number of children with autism who will soon be adults (see Opportunities For Serving Adults With Disabilities – A Look At The Numbers). For the population with autism, there were striking differences in the projected total annual costs – $175 to $196 billion for adults compared to $61 to $68 billion for children.

Following that article, one of our readers suggested that autism costs for children were lower because of the role of special education in financing health care services. To address that comment, I took a deeper look at the numbers we provided in that article.

First, the total annual cost of care for adults with autism is higher because the population of adults with autism is larger than the population of children with autism – about 2.8 million adults with autism versus about 859,000 children with autism. Second, the total per capita cost of providing care for children is actually higher than the total per capita cost of providing care to adults. Mean costs for the 859,000 children with autism range from $55,944 to $93,196 per child, while mean costs per year for the 2.8 million adults with autism were $50,320 to $88,026 per adult – and this estimate of autism spending does take into account special education funding. The higher per capita cost of providing care to children is likely the result of applied behavioral analysis services and the substantial cost of providing special education services. According to the Centers for Disease Control (CDC) study, mean special education costs ranged from $31,460 to $62,920 per child for children ages 0 to 5 year old and $13,980 to $27,961 per child for children ages 6 to 21 years old (see Adults With One Or More Functional Disabilities, United States, 2011-2014).

Although those additional costs and the differences were included in the researcher’s estimate of spending on autism, this reader question brings up an important point on the role of special education in providing services to children. I think many managers in provider organizations are delivering services to children with disabilities without a clear understanding of the source of their funding. This makes it difficult to know how state and federal policy changes (like cuts to Medicaid) will impact their ability to deliver services. As a result, I’ve provided a little background on special education and the intersection of Medicaid.

The Individuals with Disabilities Education Act (IDEA) guarantees that all children with special health care needs and disabilities have access to a free and appropriate education (FAPE). Children are determined eligible for special education services based on an assessment by the school district and then an individualized education program (IEP) is created. IEPs denote the specific special education services a child needs, as well as related medical services, such as occupational or physical therapy.

Funding for special education services is provided through three main funding streams — grants from the federal government, state and local funding streams, and Medicaid. Federal grants are determined by congressional appropriations and although Congress agreed to fund the grants at 40% of the cost of care per child, appropriations have never reached this level. Since 2010, federal grants cover about 16% of the cost per child. State and local spending comes from a variety of sources and is likely an underestimate as not all states report special education spending. As a result of low federal funding for special education services, many states use Medicaid funding as an important source of additional funds for special education services.

States can use Medicaid funding for special education when:

  1. Services are included in the child’s IEP and the services are medically necessary and included in a Medicaid-covered category.
  2. All other federal and state Medicaid regulations are followed, including those for provider qualifications, comparability of services and the amount, duration, and scope of provisions.
  3. The services are included in the state’s plan or available under Early and Periodic Screening, Diagnostic, and Treatment (EPSDT).
  4. The child is eligible to receive services through Medicaid.

In 2015, the U.S. spent $34.1 billion on special education services including $11.6 billion in grants from the federal government, $19 billion in state spending, and $3 billion in Medicaid spending. With about 6.7 million children receiving IDEA services, the cost of providing special education services to children is at least $5,105 per children.

For detailed information on IDEA spending and demographics be sure to check out our latest market intelligence report: The Special Education Market: $34. 1 Billion In Spending For 6.7 Million Children In 2015. This report includes a trend analysis of IDEA spending and the number of children receiving services, information on spending and the number of children enrolled in special education in your state, and an explanation of the funding streams that are used to provide special education services for children.

And for even more on autism and children with intellectual and developmental disabilities, join us at The 2017 OPEN MINDS I/DD Executive Summit in Long Beach, California on August 15, where David Braddock, Ph.D., Executive Director, Coleman Institute for Cognitive Disabilities, University of Colorado will kick off the institute with his keynote address, The State of the States in Developmental Disabilities: 2017.


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