BACKGROUND: School nurses can provide direct services for children with asthma, educate, and reinforce treatment recommendations to children and their families, and coordinate the school-wide response to students' asthma emergencies. Unfortunately, school-based health services today depend on an unreliable patchwork of funding. Limited state and local funds lead to extremely low nurse-to-student ratios, resulting in missed opportunities for prevention and care of asthma and other health conditions. METHODS: We carried out a nonsystematic review of legal, government, private health foundation, and medical literature. RESULTS: Many health services for asthma and other conditions provided in school settings are services typically covered by Medicaid and the Children's Health Insurance Program (CHIP) when offered in other settings. However, complex reimbursement rules, questionable policy guidance establishing a "free care rule,'' and other barriers have limited the ability of schools to seek Medicaid/CHIP reimbursement for these services. Recent legal developments may help overcome some of these barriers, and new flexibilities in Medicaid law bring opportunities for increased reimbursement of school-based health services. CONCLUSIONS: Policymakers should call on the Centers for Medicare and Medicaid Services to abandon the "free care rule'' and issue other guidance that would enable schools to appropriately obtain Medicaid reimbursement for nursing services.