I am generally loathe to defend insurance companies and I am thrilled that the iPad (even though I generally hate Apple) is helping this child.
However, I am the father of a special needs child. You have to understand not just that companies charge a massive premium for items for children like this, but that parents want so badly to help their children they will literally do nearly anything, including really whacked out shit. They are not bad people, just desperate. This includes wacko blood therapies and all other kinds of bizarre stuff. It's not unreasonable for insurance, be it government or private, to demand actual studies showing this stuff helps in enough cases to recommend it. It is medical treatment and needs to meet the same standards as any other medical treatment, it needs to be safe and effective (though it's most likely safe, it still should be proven).
All in all, the cost of an iPad is a pittance compared to what you pay out of pocket for children with special needs. It would be nice if it was covered, but I for one, who even has a self interest in this subject, am just fine with doing due diligence on this one before we declare it "treatment". Not really because it would cost insurance companies money needlessly, but mostly because I hate to see parents miss out on opportunities for effective treatment for their children in favor of what amounts to quackery (in many cases).
I can say anyone who has had kids in the autism spectrum is not in the least surprised by this, though, a lot of us have found that certain things help certain types of children do far better in learning to communicate, pets and computers are two big success stories for a lot of us.
Btw, I'm buzzed, pardon any incoherence, and if I was a jerk, I didn't mean to be.