The Obama administration’s recently proposed anti-discrimination rule regarding the provision and coverage of transgender surgery can be expected to have significant impacts on the health insurance industry.

However, those impacts do not appear to be entirely clear. Advocates note while there are costs to providing transgender care, there are also costs to denying care, which makes a direct comparison complicated. In addition, there is limited information on how many Americans identify as transgender, making it difficult to gauge how many people might seek care under the new rule.

About the proposed rule

The rule does not state insurers must cover gender transition care, but it would require insurers utilize non-discriminatory criteria in making their coverage determinations.

The rule would apply to all providers and programs that accept federal funding, and insurers that sell exchange plans would have to follow suit with their off-exchange plans as well.

The public is invited to submit comments by November 9.

Cost of care vs. cost of denial

HHS' proposed rule estimates it will cost the healthcare industry, as well as state and federal agencies, a total of $558 million during its first years due to training and administrative costs.

“We anticipate that a large number of providers may need to develop or revise policies or procedures to incorporate this prohibition,” the rule states. It goes on to say, “We further assume that one-third of health insurance issuers will need to develop or modify policies and procedures.”

Despite the costs involved for new policies, training and care coverage, recent survey results suggest the cost of denying transgender care is also substantial for insurers and society at large.

A survey of more than 355 transgender individuals, conducted by TrueChild in May, revealed the following issues reported as a result of being denied coverage for transition-related care:

35% needed psychotherapy;

23% became unemployed;

15% attempted suicide;

14% became homeless; and

37% turned to drugs and/or alcohol.

The provision of gender transition care would “help reduce rates of depression, suicide and substance abuse among transgender people, as well as alleviate stress-related health conditions that all people have when they aren't getting the care they need,” said Mara Keisling, executive director of the National Center for Transgender Equality, in a statement about the proposed rule.

Insurers’ perspectives

America’s Health Insurance Plans (AHIP) has yet to release a position on the proposed rule, and multiple insurers chose not to answer whether they see it as cost-effective to provide gender transition coverage. However, those that already have policies that allow for the coverage are eager to highlight their proactive stance on the issue.

“In early 2009, Aetna was the first major health benefits company to add gender reassignment procedures as a benefit for its employees and any contracted companies choosing to add it to their benefits package,” Aetna spokesman Walt Cherniak wrote to Healthcare Dive.

He adds Aetna has long been supportive of the LGBT community through other changes such as implementing domestic partner coverage for many policies in the mid-1990s.

“Our leadership on this issue comes from the top,” Cherniak says, noting Aetna Chairman and CEO Mark Bertolini was elected as the first straight ally board member of the National Gay and Lesbian Chamber of Commerce several years ago.

Harvard Pilgrim also points to its commitment to providing equitable access to healthcare for its transgender members. “The company was the first in the New England region to offer a fully insured transgender benefit and has offered coverage for sexual reassignment and related surgeries to its employees for the last two years,” spokeswoman Mary Wallan told Healthcare Dive. She adds Harvard Pilgrim is a corporate sponsor of Freedom Massachusetts’ campaign for public accommodation, which ensures the transgender community is protected from discrimination in public spaces. Harvard Pilgrim was also recognized by the Human Rights Campaign as a Best Place to Work for 2013-15.

Transgender population in question

We still don’t have thorough data on how many Americans identify as transgender, so there is no easy answer as to how many people might seek transition care under the proposed rule.

The most commonly cited estimate is 700,000, or about 0.3% of the adult population. However, that estimate comes from limited survey data, the New York Times recently noted, because the Census Bureau does not currently collect gender identity data.

Census and Social Security data have been analyzed to identify those who change their name and gender, but such studies are also limited in their ability to gauge the transgender population, notes the Times, because of issues including privacy, security and the two choices of "male" and "female" often being considered insufficient.