Will Medicaid Cuts Affect ABA Therapy?

Sep 3 / Kristyn Peterson

If you're a parent, provider, or advocate in the ABA world, you're probably asking the same question we are: Will Medicaid cuts affect ABA therapy?

The short answer is: Yes.

The longer answer is more complex and depends on where you live, how your clinic operates, and how fast you adapt. Let’s break it down.

Why Medicaid Matters for ABA Therapy

Medicaid has become a critical funding source for many families seeking ABA therapy for children diagnosed with autism. Thanks to federal mandates (like EPSDT) and state-level expansions, Medicaid now covers ABA in most states. It has allowed families to get life-changing support without the crushing out-of-pocket costs.

It also helped ABA providers grow. More clinics opened. Staff were hired. Waitlists shrank.

But all that’s at risk now.

What's Behind the Cuts?

Both federal and state governments are under pressure to cut costs. In early 2025, a new bill passed the House (called the One Big Beautiful Bill Act, or H.R. 1) proposing $600–$800 billion in Medicaid cuts over the next decade.

It’s not just about ABA, but the ripple effects on autism services are real. Here’s what’s being proposed:

Federal-Level Proposals

  • Spending caps on Medicaid (block grants)
  • Freeze on provider taxes (reduces state Medicaid budgets)
  • Work requirements (adds red tape and delays)
  • Elimination of supplemental payments for pediatric providers

State-Level Moves

States like Indiana, Idaho, Louisiana, and Floria are already taking action: 
  • Indiana: Proposed a 30-hour/week cap for 3 years per child
  • Louisiana: Largest Medicaid provider (Optum) plans to drop up to 40% of ABA providers
  • Idaho: 4% rate cuts for Medicaid with 8 days notice

Other states, like Arizona, face risks through trigger laws or budget shortfalls.

How Will Medicaid Cuts Affect ABA Therapy?

For Families

  • Fewer hours of therapy
  • Longer waitlist
  • More denials
  • More out-of-pocket expenses
ABA therapy works best when it’s intensive and consistent, especially in early childhood. These proposed cuts may force families to ration care or stop services entirely.

For ABA Providers

  • Lower Medicaid reimbursement rates
  • Increased billing denials and audits
  • Staffing cuts and caseload limits
  • Financial instability, especially for smaller clinics
Many providers may leave Medicaid networks altogether, limiting access for publicly funded families.

What Can Providers Do Right Now?

Frequently Asked Questions

Will ABA therapy still be covered by Medicaid?

Yes, but how much and for how long may change depending on your state. Some states are capping hours or limiting eligibility.

Why is ABA being targeted?

Rising demand, rising costs, and isolated fraud cases have made ABA a focus for cost containment, even though it’s evidence-based and effective.

Is this happening everywhere?

No. States vary widely; it's critical to understand what's happening at both the state and federal level. 

What can families do?

Talk to your providers, call your legislators, join advocacy coalitions, and share your stories. The fight isn’t over!

Who is Moralis and how can we help? 

Moralis is a boutique consultancy that helps ABA providers and autism-focused organizations build strong, scalable, and compliant operations. We combine behavioral science, systems thinking, and real-world experience to:
  • Streamline billing and administrative systems
  • Design compliance and documentation workflows
  • Improve staff retention and service quality
  • Forecast financial health under different Medicaid scenarios
Whether you’re a single-site practice or growing multi-state group, we’re here to help you navigate this turbulent time with strategy and stability.

Final Thoughts

Yes, Medicaid cuts will affect ABA therapy. But how deeply depends on preparation.

Families: Stay informed and speak up.
Providers: Don’t wait. Review your systems. Diversify your revenue. Advocate for protection.

ABA is worth fighting for. Let’s make sure the systems supporting it stay strong.

Need help navigating Medicaid changes?