Trump administration moves to limit trans care in ACA plans
The Trump administration is seeking to limit coverage of gender-affirming care for adults and minors in Affordable Care Act marketplace health insurance plans beginning next year.
Why it matters: The rule, if finalized, would not ban marketplace plans from covering gender-affirming care services. But it could raise out-of-pocket costs for patients, add administrative burdens for insurance companies and inject confusion into state operations, health policy experts say.
"It's a clear signal that, certainly, the federal government would not be looking to ensure that coverage is not discriminatory, as it has been doing before," said Katie Keith, director of the Center for Health Policy and the Law at Georgetown University.
Catch up quick: The Centers for Medicare and Medicaid Services last month proposed stopping non-grandfathered individual and small group market plans from covering what it calls "sex-trait modification services" — a reference to gender-affirming care — as an essential health benefit.
Essential health benefits are services that have to be offered to all marketplace enrollees with limits on out-of-pocket costs.
If finalized, the change would go into effect for 2026 coverage. The proposal is part of a larger package that would roll back several Biden-era flexibilities to ACA plans that made health insurance easier to access.
The proposal doesn't define the term "sex-trait modification," saying that not adopting a definition is standard with other restrictions on essential health benefits. But it indicates that the term references treatments including puberty blockers, hormone therapies and surgical operations.
Zoom out: This is just one recent move from the Health and Human Services Department that takes aim at health coverage for gender-affirming care.
CMS sent a separate letter to Medicaid directors last week that essentially requests states stop covering gender-affirming care for minors.
Gender-affirming care is supported by major medical organizations, including the American Medical Association, the American Academy of Pediatrics and the American Psychiatric Association, which all concur it is medically necessary and can be lifesaving care.
State of play: California, Colorado, New Mexico, Vermont and Washington currently cover gender-affirming care services as essential health benefits in their benchmark plans.
Six other states don't explicitly include or exclude the services in their benchmarks, while 40 states exclude the services, per the proposed rule.
Preventing states from including the care as an essential health benefit could increase costs for transgender enrollees in marketplace plans that do choose to keep covering gender-affirming care, according to an issue brief from KFF.
Enrollees wouldn't be guaranteed the cost-sharing protections that they get with essential health benefits, and insurers wouldn't have to count gender-affirming care costs toward deductibles and out-of-pocket maximums.
The proposal makes note of President Trump's executive order, currently halted by a federal judge, to defund gender-affirming care for minors.
CMS says that regardless of whether the executive orders are allowed to be implemented, its proposal will remain viable because it's correcting what the agency sees as a regulatory deficiency: Employer-sponsored plans don't typically cover gender-affirming care services, and essential health benefits should be equal in scope to employer coverage, the agency claims.
Reality check: It's not rare for employer-sponsored health plans to cover gender-affirming care. Nearly one-quarter of large employers reported covering the services in KFF's 2024 survey of employer benefits. Another 45% said they didn't know if their firm covered gender-affirming care.
"Denying access to medically necessary care, especially for trans people of color and immigrant trans people, will only further increase health disparities and put lives at risk," Plume, a health clinic for transgender and gender-diverse people, wrote in a comment letter to CMS.
Between the lines: Some health insurers said CMS should not finalize the proposal because it would be costly and operationally difficult for them.
That's partly because gender-affirming care is made up of multiple services spanning different essential health benefit categories and used regularly for reasons outside of gender transitioning, the Association for Community Affiliated Plans wrote in comments to CMS.
CMS should preserve the current framework that allows states to choose their own essential health benefit benchmark plans without overly prescriptive restrictions, health insurance trade group AHIP wrote in its own comments to the agency.
What to watch: If CMS finalizes the policy, it could be challenged in court.
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