Rates of neonatal abstinence syndrome (NAS) resulting from opioid misuse are rising. However, policies to treat opioid misuse during pregnancy are unclear. We apply a difference-in-differences design to national pediatric discharge records to examine the effects of state Medicaid policies on NAS. Among states in which Medicaid covered two clinically-recommended medications for treating opioid misuse (buprenorphine, methadone), the Affordable Care Act's Medicaid expansion reduced Medicaid-covered NAS hospitalizations. Medicaid expansion did not affect NAS hospitalizations in other expansion states. These findings imply a nuanced relationship between Medicaid policy and NAS that should be considered in addressing opioid misuse among pregnant women.