New Federal Rules Affecting Coverage of Treatment for Gender Dysphoria: Considerations for States

Early in his second term, President Trump issued an Executive Order instructing the Secretary of Health & Human Services (HHS) to “take all appropriate actions” to stop the provision of treatment for gender dysphoria to children. A separate Executive Order barred the use of federal funds to promote “gender ideology.” Shortly following these executive orders, HHS proposed, and then finalized, a regulation prohibiting health insurers from treating so-called “sex trait modification procedures” as an “essential health benefit” (EHB) under the Affordable Care Act (ACA). Although 21 states have filed suit to enjoin this provision and other parts of the regulation, this provision will, if allowed to go into effect, apply to benefits for plan year 2026. The size of the transgender population is small (an estimated 0.5% to 1.5% of the U.S. population), and the cost of covering treatment for gender dysphoria is low. However, barring health plans from covering such treatment will expose individuals who need these services to significant out-of-pocket burdens. Transgender individuals, on average, have lower incomes than non-transgender individuals, making higher costs a greater barrier to getting the care they need.