Medicaid Psychotherapy Spending Up 156%

August 20, 2026 - 04:02

New data shows Medicaid spending on core psychotherapy services jumped 156 percent between 2018 and 2024. The findings, released by Behavioral Health, point to a sharp increase in both the number of people seeking care and the cost per session.

The analysis tracks spending on individual, family, and group therapy across all state Medicaid programs. In 2018, total expenditures sat near baseline levels. By 2024, that figure had climbed to roughly two and a half times the starting point. Researchers say the surge reflects broader trends in mental health demand that began during the pandemic and have not receded.

Several factors drive the increase. More providers now accept Medicaid, which expands access but also raises total billing. Reimbursement rates have improved in many states, making it more viable for therapists to take on public insurance. At the same time, the share of Medicaid enrollees reporting anxiety, depression, or trauma-related conditions has grown steadily.

The report also notes a shift in how care is delivered. Telehealth now accounts for a significant portion of psychotherapy claims, a change that started as an emergency measure but became permanent in most states. Virtual sessions tend to have lower no-show rates, which keeps utilization high.

State-level variation remains wide. Some states saw spending grow by over 200 percent, while others stayed closer to 80 percent. The differences track with provider supply, prior authorization rules, and how aggressively states expanded telehealth coverage.

The data does not include psychiatric medication management or crisis services, so the full picture of Medicaid behavioral health spending is likely even larger. Policymakers are watching the trend closely as budgets tighten. The question now is whether this level of investment is meeting patient needs or simply reflecting higher prices for the same volume of care. Early signs suggest both are happening at once.