CRI News

Tragic Incentives and Transgender Medical Care

By Stacie Beck, Ph.D.Associate Professor of Economics and C.D. Casscells, M.D.

Center for Health Policy at the Caesar Rodney Institute

October 20, 2023



The 2011 burst in transgender medical treatments came shortly after the passage of the Affordable Care Act. This accelerated after passage of a non-discrimination federal Health and Human Services regulation on private insurance in 2016. The US experienced a dramatic increase in transgender medical treatments for minors that accelerated even further in 2021.


However, during the last few years, many other medically advanced countries are backing away from pharmaceutical and surgical treatments, particularly for minors. Sweden, Finland, Australia, New Zealand, and the UK are drastically limiting medical transitioning in favor of counseling and psychotherapy.


Why? Because in these countries, they “follow the science.” However, in the US, the incentive is to “follow the money.” Government and private insurance pay a lot for transgender medical treatment, but not for much counseling.




Despite claims to the contrary, there are no evidence-based studies that show long-term benefits to medicinal or surgical sex change to justify the considerable and growing data showing permanent negative side-effects. Existing study surveys are inconclusive, but the trend lines are obvious as data accumulates.1 Positive outcomes last invariably three months or less.


Suicide rates are higher among gender transitioners than with those who naturally simply outgrow the dysphoria. 




Medicare, Medicaid, and most private health insurance cover “medically necessary” transgender drugs and surgery. At the same time, the Affordable Care Act severely curtailed payments for counseling and psychiatric hospitalization.


Puberty blockers cost nearly $18,000, and cross-sex hormonal treatments costs are between $160 and $250 per year (taken for life). Average out-of-pocket costs for puberty blockers are 8% of the total; hormonal treatments average 25-38%. Transgender surgery (hysterectomies, castrations, mastectomies, breast implants, and mutilating vaginal, clitoral, penile and urethral surgeries) range from $8,299 to $138,000. Out-of-pocket costs are below 10% of the total, so 90% are paid by Medicare, Medicaid or private insurance.2 


“Medically necessary” transgender treatments require a diagnosis of mental distress associated with gender dysphoria. Therefore, the minimally invasive, most appropriate care would be psychotherapy, which is what other countries have concluded, and what they pay for. Medicaid, Medicare, and private insurance don’t pay for longer term counseling. The costs of hormone therapy go on forever, along with the never-ending costs of repeated surgeries, surgical complications, and the medical treatment of side-effects. But the low cost of counseling is a bargain compared to the extremely combined high costs of the puberty blockers and hormonal treatments (which are typically cancer chemotherapy drugs being used off-label) and surgery.


Tragically, Delaware’s Medicaid practitioner manual requires a relatively short period (3 months) of counseling that can be concurrent with hormonal treatment.3 Given the powerful mental effects of cross-sex hormonal (chemo)therapy, psychotherapeutic counseling should occur without these confounding drug-induced mental side-effects.


Shockingly, individuals with an inappropriately broad range of medical training and expertise are allowed to prescribe transgender medical treatment.4 Notably, the vast majority of these treatments are prescribed by those with the fewest years of medical training.5 As a matter of practice, many individuals outside of the mental health specialty prescribe treatment, and even school counselors with no medical training actively refer minors to prescribers.


These two facts alone virtually guarantee that many persons are receiving inappropriate transgender medical treatment, with all too often tragic consequences.


Counseling and maturation is universally acknowledged as most successful and safest treatment. Three months is not an adequate period of counseling for many; a year or more may be adequate, but full physical and mental maturation would be ideal for long-term health. Gender transitioning should be an option of last resort.



1 BMJ 2023;380:p382 Published: 23 February 2023


Baker, Kellan and Arjee Restar, ‘Utilization and Costs of Gender Affirming Care in a Commercially Insured Transgender Population’ The Journal of Law, Medicine & Ethics, 50 (2022): 456-470. Prices are averages from a sample taken from 1993-2019. These are surely higher now due to inflation, nor do they include all costs.


Delaware Health and Social Service, Division of Medicaid & Medical Assistance, Delaware Medical Assistance Program Practitioner Provider Specific Policy Manual, Section 18




5 Appendix in Baker and Restar.



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