The Applied Behavior Analysis (ABA) therapy industry faces its biggest policy uncertainty in a decade. Trump’s “One Big Beautiful Bill Act” (H.R. 1), which passed the House on May 22 by a razor-thin 215-214 margin, contains sweeping Medicaid provisions that could fundamentally reshape how autism services are funded and delivered across the United States.
While the bill doesn’t repeal federal autism coverage mandates, its proposed $600-$800 billion in Medicaid cuts over 10 years, combined with new administrative barriers and a freeze on state provider taxes, would create unprecedented pressure on state budgets. For ABA providers who derive a large portion or more of their revenue from Medicaid, the stakes couldn’t be higher.
But is a worst-case scenario actually the most likely outcome? My analysis suggests the answer is more nuanced than headlines might suggest.
What’s Actually in the Bill That Matters for ABA
The Big Four Medicaid Provisions
Federal Spending Caps and Block Grants The centerpiece of H.R. 1’s Medicaid reforms would impose per-capita spending caps on federal contributions, effectively creating block grants that grow slower than historical medical inflation. The Congressional Budget Office projects this could reduce federal Medicaid spending by $600-$800 billion over the next decade.
Provider Tax Freeze Perhaps more immediately threatening to ABA providers is the bill’s freeze on state Medicaid provider taxes. States would be barred from raising existing provider taxes or creating new ones above fiscal year 2025 levels. This provision alone could cost states roughly $16 billion annually in revenue they’ve historically used to finance their share of Medicaid costs.
Work Requirements and Administrative Churn Starting in 2026, the bill would impose work requirements on able-bodied adults and mandate six-month eligibility renewals instead of the current 12-month cycle. While these provisions primarily target adults without disabilities, the administrative burden creates system-wide delays that often affect children’s services authorization and continuity.
Limits on State-Directed Payments The legislation would cap or phase out supplemental payments that many states use to boost pediatric specialty rates. ABA organizations that have negotiated these uplifts—particularly to cover Board Certified Behavior Analyst (BCBA) supervision requirements—may see them disappear entirely.
What Stays Protected
Critically, H.R. 1 does not repeal the Early and Periodic Screening, Diagnostic and Treatment (EPSDT) mandate, which requires states to cover medically necessary services for children under 21, including ABA therapy. This federal requirement has survived every major budget battle since 1967 and provides a crucial backstop for pediatric autism services.
Risk Matrix: How Bad Could It Get?
| Risk | Explanation | Risk Level/Impact |
| Reimbursement Rate Compression | If the House language becomes law unchanged, state Medicaid directors would face immediate pressure to close budget gaps. Historical precedent suggests they’ll cut optional adult services first, but base rate reductions (maybe around 5-20%) for all providers—including ABA—are highly likely as states scramble to balance their books. | High |
| Access Barriers and Wait List Expansion | Lower reimbursement rates combined with increased administrative burden would likely drive some providers out of Medicaid networks entirely. Rural and underserved areas, already facing provider shortages, could see dramatic access deterioration. Wait times for initial ABA evaluations could double or triple in some markets. | High |
| Cash Flow Stress for Independent Practices | Smaller ABA practices operating on thin margins would face a perfect storm: lower rates, slower state payments due to administrative backlogs, and higher back-office costs to manage eligibility churn. My assessment suggests practices with large percentage of Medicaid exposure could see EBITDA margins compress. | High |
| Talent Retention Challenges | Margin compression would limit providers’ ability to offer competitive wages and bonuses to BCBAs and Registered Behavior Technicians (RBTs). In markets with acute labor shortages, this could accelerate turnover and drive up recruitment costs. | Medium |
But Here’s Why the Worst-Case Scenario Isn’t Most Likely
| Reason | Explanation |
| Senate Math Creates Real Obstacles | With Republicans holding just 53 Senate seats, losing any three GOP votes would kill the House version unless Democrats cross over (highly unlikely). At least five Republicans—including Alaska’s Lisa Murkowski, West Virginia’s Shelley Moore Capito, Missouri’s Josh Hawley, North Carolina’s Thom Tillis, and Maine’s Susan Collins—have publicly expressed discomfort with deep Medicaid cuts. These “Medicaid moderates” represent states with significant rural populations, high disability rates, or strong provider constituencies. They’re actively seeking compromise language that would soften cuts or create pediatric carve-outs. |
| Historical Protection for Children’s Services | EPSDT has survived every major budget battle since 1967, including the 2017 ACA repeal attempt. When states have faced Medicaid pressure in the past, they’ve consistently cut adult dental care, optional mental health benefits, and administrative services before touching children’s developmental services. Several Republican governors, including those in Ohio and Georgia, have already signaled they would shield pediatric services from federal cuts using state rainy-day funds if necessary. |
| States Have Unprecedented Fiscal Cushions | Thanks to pandemic-era federal aid and strong tax collections, 39 states entered fiscal year 2025 with record reserve balances. While these surpluses won’t last forever, they provide crucial breathing room for states to phase in any necessary adjustments rather than making immediate, drastic cuts. |
| Implementation Delays Are Highly Likely | Medicaid work requirements have a troubled history. Courts blocked 12 of 13 state waiver applications between 2019-2020, and the Centers for Medicare & Medicaid Services routinely grants implementation delays when states can’t meet IT or staffing requirements. Even if H.R. 1 becomes law, actual implementation could be delayed by litigation, technical challenges, and state capacity constraints well into 2027 or beyond. |
Potential Scenarios: What’s Most Likely to Happen
Based on my analysis of Senate dynamics, implementation challenges, and historical precedent, here’s a three-year outlook for a typical ABA provider with large Medicaid exposure:
| Scenario | Impact |
| Scenario A: Bill Dies in Senate | Medicaid ABA rates continue growing at 2% annually; wait lists remain stable; no margin compression. |
| Scenario B: Major Pediatric Carve-Outs | Children’s services largely exempted from cuts; work requirements delayed; average rate reduction of 2%; EBITDA margin compression of 1 percentage point. |
| Scenario C: Moderate Compromise | Spending caps eased but not eliminated; provider tax freeze modified; average rate reduction of 6%; margin compression of 4 percentage points. |
| Scenario D: House Language Survives Intact | Full cuts implemented; rates fall 10-12%; margin compression of 7-9 percentage points. |
Smart Moves While the Political Process Plays Out
Financial Stress Testing and Planning
Every ABA provider should identify which cost categories can flex (facility leases, non-billable administrative hours) and which are fixed (clinical staff, liability insurance).
Payer Mix Diversification
Even shifting 10% of volume away from Medicaid can dramatically reduce policy risk. Priority targets include:
- TRICARE East and West networks for military families
- Self-funded employer autism benefits
- Telehealth-based parent training programs that qualify for different billing codes
- Private insurance networks in states with strong autism mandates
Contract Protection
Lock in multi-year managed care organization (MCO) contracts now, before Senate votes, with cost-of-living adjustment floors or consumer price index escalators. Many MCOs are willing to negotiate these protections while policy uncertainty remains high.
Strategic Advocacy
Senate moderates are actively seeking data to justify pediatric exemptions. ABA providers should compile state-specific outcome data showing return on investment for early autism intervention. Organizations like the Council of Autism Service Providers are coordinating these efforts, but individual provider engagement with key Senate offices remains crucial.
Operational Efficiency Gains
Implementing scheduling optimization software, RBT utilization dashboards, and other productivity tools can often recapture value in billable hour efficiency. For providers facing potential rate cuts, these improvements could be the difference between maintaining profitability and operating at a loss.
Key Dates to Watch
| Date | Event |
| June 17-28 | Senate Finance Committee hearings on H.R. 1 begin. Watch for amendment language addressing provider tax freezes or creating pediatric exemptions. |
| July 4 target | Senate floor vote. Any delay past Independence Day recess suggests significant behind-the-scenes negotiations and likely bill modifications. |
| July 15 | Congressional Budget Office rescoring of Senate amendments. A deficit reduction number below $500 billion typically signals major Medicaid concessions. |
| September 30 | Fiscal year 2026 state budget deadlines. Early-adopter states may preemptively adjust rates; monitor provider bulletins in your key markets. |
Bottom Line: Prepare for Pressure, But Don’t Panic
Trump’s One Big Beautiful Bill Act represents the most significant policy threat to ABA therapy providers in a decade, with the potential for meaningful Medicaid rate reductions and access barriers starting in 2026. However, Senate dynamics, historical protection for children’s services, strong state fiscal positions, and likely implementation delays suggest that worst-case scenarios—while requiring preparation—are not the most probable outcomes.
ABA providers should immediately stress-test their operations under multiple rate-cut scenarios, accelerate payer diversification efforts, and engage in strategic advocacy for pediatric exemptions. But they should also recognize that a moderate squeeze is more likely than a sector-wide collapse, particularly for operators who maintain lower Medicaid exposure and invest in operational efficiency improvements.
The next 90 days will largely determine whether this becomes a manageable headwind or an existential threat. Smart positioning now—both financially and politically—will separate the winners from the casualties in what could be the ABA industry’s most challenging period since autism insurance mandates first emerged two decades ago.
