The Trump administration’s campaign to eradicate transgender health care for young people has run into a series of legal roadblocks: Judges have ruled against Justice Department subpoenas, a declaration from the health secretary, and parts of the president’s executive order halting all federal support for this care. But a new rule finalized this week by the Centers for Medicare and Medicaid Services may prove more difficult to challenge.
The agency announced Tuesday it was barring the use of federal Medicaid and CHIP dollars to pay for pediatric gender-affirming medications and surgery. Then on Thursday, the Department of Health and Human Services released a report on diagnostic coding practices among gender-affirming care clinicians and referred hundreds of health care groups to the Justice Department for investigation into those practices. Despite many court losses, the administration has successfully pressured at least dozens of hospitals into closing or pausing gender-affirming care programs.
“What we see here is an ideological campaign to eradicate access to a kind of treatment because the president doesn’t like it,” said Elana Redfield, federal policy director at the Williams Institute, a UCLA School of Law think tank focused on LGBTQ+ issues. “But I would describe [the final CMS rule] as sort of a gray area,” Redfield said.
The agency received nearly 35,000 public comments after proposing the coverage rule, and as required, it responded to those concerns in the final document. By taking the rule through the typical regulatory process, the agency is “trying to position this rule to withstand the inevitable legal challenges,” according to Travis Jackson, a partner in health care law at McDermott Will & Schulte. “I think they’ve learned more about vulnerabilities that have thwarted their past efforts in this and other areas.”
Others agreed. “This rule feels less out there than some of the other proposals,” said Carmel Shachar, director of the Health Law and Policy Clinic at Harvard Law School.
Set to go into effect on Oct. 13, the rule bans the use of federal Medicaid funds for gender-affirming medication and surgery for anyone under 18; for the Children’s Health Insurance Program, the ban extends to anyone under 19. Mental health care still can be covered with federal funds, and states are not prohibited from using their own Medicaid dollars to pay for any gender-affirming care.
While legal experts expect the coverage restriction to endure in the short term, they don’t see it as impregnable. Lawsuits are expected — a press officer from Andrea Campbell’s office confirmed that the Massachusetts attorney general plans to challenge the rule in court.
Potential challenges to the rule
It’s not uncommon for certain health care offerings to be excluded from federal Medicaid coverage — the program doesn’t cover over-the-counter medications or abortion services, for example. CMS asserts in the final rule that the agency has “independent legal authority” to regulate which types of health care the federal government funds. But lawyers who spoke with STAT said the agency’s unilateral decision to revoke coverage without any directive from Congress is perhaps unprecedented.
“If they had a bunch of examples, they would cite them,” said Katie Keith, director of Georgetown University’s Center for Health Policy and the Law. The final rule’s most relevant example refers to the ban on federal coverage of abortion, which was dictated by Congress via the Hyde Amendment. The document also cites a 1976 regulation that prohibited federal financial participation in sterilization for people under age 21, issued in response to public outcry over the practice.
CMS also asserts that this rule is based on legal authority from other administration actions on gender-affirming care. “Superficially, they are correct,” Jackson said. Only one section of the president’s executive order on this care is currently enjoined. At the time, the court decided that a challenge to other sections, including directives on Medicaid funding, were not ready for litigation. Now that this rule has been finalized, that could change. Meaning, per Jackson, “they are correct, but they could also be wrong.”
Questions also linger about the validity of the scientific evidence cited in the rule, and whether the agency is attempting to regulate medical care, which would be under the states’ jurisdiction.
“There are parts of the rule where they make it clear they think this care should be tapering off,” Keith said, pointing to an explicit “tapering period” that was added to the final document, allowing federal funds to continue covering hormones for six months after the rule is in effect, until April 2027. Clinicians who provide gender-affirming care have emphasized that there is no safe way to wean transgender people off their medications.
“It gets a little bit muddled,” Keith said. “Is this just about federal funding or are you trying to take kids off their treatment?”
The final rule repeatedly references a gender dysphoria report released by HHS last year that questioned the standards of care for transgender youth, while criticizing the methodology of a report commissioned by the Utah State Legislature that came to different conclusions, and completely omitting a recent report out of the Netherlands that also contradicted the HHS review.
“I do think there are legitimate questions as to whether or not the record in front of HHS truly supports the actions that HHS is taking in the rule,” Jackson said.
Impact on patients and families
The health policy group KFF estimates that about 130,000 young transgender people covered by Medicaid or CHIP live in states where gender-affirming care is still legal. Clinicians, patients, and advocates say the final rule will effectively revoke potentially lifesaving care from those trans youth in low-income families.
While states are able to make up the lost federal funding, “this could be tough for states to do in a normal environment,” Keith said, but states are also dealing with other major coverage changes expected to push millions of people to lose Medicaid coverage.
Lawyers told STAT that the final CMS rule is seen as more legally viable than another rule that was proposed alongside it, which aims to restrict participation in Medicaid for hospitals that provide gender-affirming care to minors. CMS emphasized that these rules should not be lumped together. So while finalizing the rule that would end the use of federal dollars doesn’t exactly set the stage for the more sweeping one, its success could inform the administration’s next move.
“I see this rule coming out as a test as to the agency’s authority, and perhaps if it withstands that test — it’s not enjoined, etc. — then you may be more likely to see them take the more draconian action of the conditions of participation,” Jackson said.