Removing the Constraints to Coverage of Gender-Confirming Healthcare by State Medicaid Programs

• Author: Nicole M. True
• Position: J.D. Candidate, The University of Iowa College of Law, 2012
• Pages: 1329-1362

1329

Removing the Constraints to Coverage of

Gender-Confirming Healthcare by State

Medicaid Programs

Nicole M. True

ABSTRACT: In April of 2010, the United States Tax Court in

O’Donnabhain v. Commissioner held that sex reassignment surgery and

hormone therapy are tax-deductible medical expenses under the Internal

Revenue Code. In the course of reaching its decision, the court found that

sex reassignment surgery is a medically necessary treatment for gender

identity disorder and that the medical community generally agrees that sex

reassignment is both an appropriate and effective treatment for gender

identity disorder. While these findings were reached in a case interpreting

the Internal Revenue Code, they still have the potential to influence whether

these forms of treatment are covered under the Federal Medicaid Act.

Currently, individuals diagnosed with gender identity disorder face a great

deal of difficulty getting Medicaid or private insurance to cover most gender-

confirming treatment, particularly sex reassignment surgery. This Note

focuses on state Medicaid coverage of sex reassignment surgery and other

gender-confirming healthcare and argues that courts reviewing denials of

coverage for these treatments should adopt the findings in O’Donnabhain.

Further, this Note argues that states with regulatory and statutory

provisions explicitly excluding coverage of sex reassignment surgery and

other gender-confirming healthcare should repeal them or, in the alternative,

that the courts in these jurisdictions should judicially invalidate these

provisions because they no longer comply with the requirements imposed by

the Federal Medicaid Act.

I. INTRODUCTION .................................................................................... 1331

II. DIAGNOSING AND TREATING GENDER IDENTITY DISORDER ................. 1332

 J.D. Can didate, The University of Iowa College of Law, 2012; B.S., The University of

Iowa, 2006. I would like to thank everyone who helped me along the way in writing this Note:

Professor Kurtz for helping me to get the ball rolling; my family and friends for the remarkable

support they have provided to me throughout my law school career; and the editors and staff of

the Iowa Law Review, Volumes 96 and 97, for their excellent editorial comments and revisions.

1330 IOWA LAW REVIEW [Vol. 97:1329

A. HISTORICAL BACKGROUND LEADING TO THE DIAGNOSIS AND

TREATMENT OF GENDER IDENTITY DISORDER .................................. 1333

B. DEFINITIONS AND DIAGNOSTIC CRITERIA ......................................... 1335

C. TREATMENT OF GENDER IDENTITY DISORDER: GENDER-

CONFIRMING HEALTHCARE ............................................................ 1337

III. COVERAGE OF GENDER-CONFIRMING HEALTHCARE UNDER

MEDICAID ............................................................................................. 1341

A. THE FEDERAL MEDICAID ACT ......................................................... 1341

B. STATE LAWS EXCLUDING COVERAGE OF GENDER-CONFIRMING

HEALTHCARE ................................................................................. 1344

C. CASES ADDRESSING MEDICAID COVERAGE OF GENDER-CONFIRMING

HEALTHCARE ................................................................................. 1345

1. Cases Decided in the Absence of an Exclusionary Statute

or Regulation ........................................................................ 1346

2. Cases Decided Under an Exclusionary Statute or

Regulation............................................................................. 1348

IV. OPENING THE DOOR TO THE FORMAL RECOGNITION OF THE

MEDICAL NECESSITY OF GENDER-CONFIRMING HEALTHCARE ............. 1349

V. REMOVING THE CONSTRAINTS TO MEDICAID COVERAGE OF GENDER-

CONFIRMING HEALTHCARE .................................................................. 1351

A. MOVING TOWARDS THE FORMAL RECOGNITION OF THE MEDICAL

NECESSITY OF SEX REASSIGNMENT SURGERY AND OTHER GENDER-

CONFIRMING HEALTHCARE ............................................................ 1351

1. The General Medical Necessity of Sex Reassignment

Surgery and Other Gender-Confirming Healthcare ......... 1352

2. The Standards of Care as a Guideline for Specific

Medical Necessity ................................................................. 1355

B. REMOVING THE CONSTRAINTS TO MEDICAID COVERAGE OF GENDER-

CONFIRMING HEALTHCARE THROUGH THE REPEAL OF THE

EXCLUSIONARY PROVISIONS ............................................................ 1356

C. REMOVING THE CONSTRAINTS TO MEDICAID COVERAGE OF GENDER-

CONFIRMING HEALTHCARE THROUGH THE JUDICIAL INVALIDATION

OF THE EXCLUSIONARY PROVISIONS ................................................. 1358

VI. CONCLUSION ....................................................................................... 1362

2012] GENDER-CONFIRMING HEALTHCARE 1331

I. INTRODUCTION

Although mental health practitioners and physicians have long

recognized the existence of gender identity disorder (“GID”), albeit not

necessarily by that name, and have treated GID in the same manner for over

fifty years, persons diagnosed with GID still face a number of legal

consequences as a result of their diagnosis.1 While the stories of persons

diagnosed with GID vary considerably, the following is a description of an

individual with GID who had experiences commonly faced by persons with

GID:

Appellant . . . was born physically a male on January 1, 1948. At a

very early age, she developed many female characteristics which

became more obvious as she grew older. The evidence presented at

the hearing was that appellant has never experienced an erection

or had sexual relations and has failed to develop secondary male

sex characteristics, such as facial hair and a deepening of the voice.

Her mother and father were unable to accept this. Appellant’s

childhood was unstable and she developed a drinking problem in

late adolescence. As a result of family problems, appellant moved

to San Francisco at age 20, adopted a female name and started

living completely as a woman. She obtained employment at various

places but was unable to continue in these jobs more than a month

or so and then she would be fired or would quit due to her failure

to undergo physical examinations because of her fear of having her

genital identity discovered. She has suffered severe depression and

has attempted suicide on several occasions.2

The appellant was seeking coverage for sex reassignment surgery (“SRS”)—a

treatment her physician testified was medically necessary to treat her GID—

under California’s state Medicaid plan.3 While the appellant in this case

received a favorable ruling, many state Medicaid programs, Medicare, and

private insurance providers deny similarly situated persons coverage for

gender-confirming healthcare,4 despite the fact that their physician

recommended the treatment.5

1. The legal issues faced by transsexuals are expansive and generally include issues

associated with bathroom usage, marriage, obtaining identification, birth certificate reissuance,

employment discrimination, incarceration (including the right to continue treatment and

placement in either a male or female facility), and the determination of parental rights

following a divorce.

2. J.D. v. Lackner, 145 Cal. Rptr. 570, 570–71 (Ct. App. 1978).

3. Id. at 571.

4. This Note adopts Dean Spade’s phrase gender-confirming healthcare as a way to refer to

the various procedures, therapies, and surgeries physicians and mental health professionals use

to treat persons with GID, which includes SRS and hormone therapy. See Dean Spade, Medicaid