Proposed Bill Seeks to End Federal Funding and Tax Deductions for Gender Transition Procedures, Impacting Medicaid, Medicare, CHIP, and ACA Coverage

A new piece of legislation, titled the "No Subsidies for Gender Transition Procedures Act," proposes significant changes to how gender transition procedures are treated under federal law, specifically concerning funding and tax benefits. If enacted, this bill would amend the Internal Revenue Code to remove the medical expense tax deduction for these procedures. It would also prohibit federal funding for such procedures through major programs like Medicaid, the Children's Health Insurance Program (CHIP) for minors, and Medicare. Additionally, the bill aims to exclude gender transition procedures from the list of essential health benefits covered under the Affordable Care Act (ACA).

The Fine Print: What Exactly is a 'Gender Transition Procedure' According to This Bill?

The bill lays out very specific definitions. "Gender transition procedure" is defined broadly to include a range of hormonal and surgical interventions undertaken for the purpose of gender transition (SEC. 2, SEC. 3). This encompasses puberty-suppressing drugs for minors not identifying with their sex, cross-sex hormones like testosterone or estrogen if given at supraphysiologic doses (for Medicaid, SEC. 3), and numerous surgical procedures aimed at altering physical appearance or sexual organs. The bill also defines "gender transition" as the process of an individual moving from identifying with their sex at birth to a different self-proclaimed identity. Crucially, "sex" is defined as biologically determined at conception as either male or female, based on reproductive function (SEC. 2, SEC. 3).

However, the bill does carve out some important exceptions. These prohibitions would not apply to services for individuals born with medically verifiable disorders of sex development, treatment for complications arising from previous gender transition procedures, or procedures deemed medically necessary to prevent imminent danger of death or major bodily impairment. It also excludes procedures to reconstruct the body to align with an individual's sex after previous gender transition procedures, and treatments for precocious puberty or male circumcision (SEC. 2, SEC. 3). Understanding these definitions and exclusions is key, as they dictate who and what is affected.

Your Taxes and Transition: Medical Deductions on the Chopping Block

One of the first major impacts detailed in the bill relates to your taxes. Section 2 amends Section 213 of the Internal Revenue Code, which currently allows taxpayers to deduct qualified medical expenses exceeding 7.5% of their adjusted gross income. This bill states that "medical care" would no longer include gender transition procedures as it defines them. This change would apply to taxable years beginning after the Act's enactment.

So, what does this mean in practice? If you, or a dependent, currently incur significant costs for gender-affirming care that you deduct from your taxes, this bill could increase your tax burden. For instance, if someone is paying out-of-pocket for hormone therapy or surgeries defined under this act, those expenses would no longer help reduce their taxable income. This directly impacts the affordability of such care for individuals who rely on this deduction to manage costs.

Federal Health Coverage on Notice: Medicaid, Medicare, and CHIP Changes

The bill takes aim at federal funding for gender transition procedures across several major public health insurance programs.

• Medicaid: Section 3 would amend the Social Security Act to prohibit federal Medicaid funds from being used for "specified gender transition procedures." For individuals who rely on Medicaid for their healthcare, this means the federal government would not contribute to the cost of these procedures, potentially leading states to drop coverage or require individuals to bear the full cost.
• CHIP: Section 4 specifically targets minors by prohibiting federal CHIP funds from covering gender transition procedures. This means families with children enrolled in CHIP seeking such care would lose federal support for these services.
• Medicare: Section 5 extends this prohibition to Medicare, meaning federal funds typically available to seniors and certain individuals with disabilities would not cover these procedures.

These changes would apply to services or items furnished on or after the date the bill is enacted. The real-world consequence is a potential loss of access to care for some of the most vulnerable populations who depend on these federal programs. For example, a young adult on Medicaid managing their transition or a family navigating CHIP for their child could find their options severely limited.

The Insurance Blueprint: ACA's Essential Benefits Might Shrink

Beyond direct funding, Section 6 of the bill targets the Affordable Care Act (ACA). It proposes to amend Section 1302(b)(2) of the ACA to explicitly exclude gender transition procedures (as defined in Section 213(d)(12) of the tax code, which this bill creates) from the scope of "essential health benefits" (EHBs).

EHBs are a core component of the ACA, mandating that most individual and small group health insurance plans cover a standard set of services. By preventing the Secretary of Health and Human Services from including these procedures in the EHB definition, the bill could lead to many insurance plans no longer being required to offer this coverage. This could make finding comprehensive insurance that covers gender-affirming care more difficult and expensive, even for those with private insurance obtained through the marketplace or small employers.

Connecting the Dots: How This Bill Could Reshape Healthcare Access

Taken together, the provisions of the "No Subsidies for Gender Transition Procedures Act" represent a significant shift in federal policy. By removing tax deductions and prohibiting federal funding through Medicaid, CHIP, and Medicare, and by excluding these procedures from ACA essential health benefits, the bill aims to curtail financial support for gender transition procedures across multiple fronts. The primary impact would likely be on transgender individuals seeking access to these medical interventions, potentially making care less affordable and harder to obtain. The bill's detailed definitions of what constitutes a gender transition procedure and its reliance on a biological definition of sex are central to its application and will be critical in determining its reach if enacted.