CHARLESTON, W.Va. —North Carolina’s and West Virginia’s refusal to cover certain health care for transgender people with government-sponsored insurance is discriminatory, a federal appeals court ruled Monday in a case likely headed to the U.S. Supreme Court.
The Richmond-based 4th U.S. Circuit Court of Appeals ruled 8-6 in the case involving coverage of gender-affirming care by North Carolina’s state employee health plan and the coverage of gender-affirming surgery by West Virginia Medicaid.
Specifically, North Carolina’s policy bars treatment or studies “leading to or in connection with sex changes or modifications and related care,” while West Virginia’s bars coverage of “transsexual surgery.”
“The coverage exclusions facially discriminate on the basis of sex and gender identity, and are not substantially related to an important government interest,” Judge Roger Gregory, first appointed by former President Bill Clinton and reappointed by former President George W. Bush, wrote in the majority opinion.
Similar cases are under consideration in courts across the country, but Monday’s is the first U.S. Court of Appeals decision to consider government-sponsored coverage exclusions of gender-affirming medical care — and whether those exclusions are lawful.
North Carolina Treasurer Dale Folwell, whose department oversees the state’s health plan, said in a news release that Monday’s majority decision was in “direct conflict” with other decisions from federal appeals courts and hopefully will be corrected by the U.S. Supreme Court.
Folwell said the State Health Plan is threatened by financial challenges as the plan’s members grow older and their health declines.
“Accordingly, the Plan cannot be everything for everyone,” Folwell said. “Untethered to the reality of the Plan’s fiscal situation, the majority opinion opens the way for any dissatisfied individual to override the Plan’s reasoned and responsible decisions and drive the Plan towards collapse.”
In the majority opinion, judges said the cost of treatment is not a sufficient argument to support upholding a policy found to be discriminatory.
“Especially where government budgets are involved, there will frequently be a ‘rational’ basis for discrimination,” Judge Gregory wrote.
Both states appealed separate lower court rulings that found the denial of gender-affirming care to be discriminatory and unconstitutional. Two panels of three 4th Circuit judges heard arguments in both cases last year before deciding to intertwine the two cases and see them presented before the full court.
In June 2022, a North Carolina trial court demanded the state plan pay for “medically necessary services,” including hormone therapy and some surgeries, for transgender employees and their children. The judge had ruled in favor of the employees and their dependents, who said in a 2019 lawsuit that they were denied coverage for gender-affirming care under the plan. Folwell had sought legal representation from the N.C. Department of Justice after the lawsuit was filed, but Attorney General Josh Stein refused.
The North Carolina state insurance plan provides medical coverage for more than 750,000 teachers, state employees, retirees, lawmakers and their dependents.
In August 2022, a federal judge ruled West Virginia’s Medicaid program must provide coverage for gender-affirming care for transgender residents.
The states’ lawyers argued that treatments for gender dysphoria — all treatments in North Carolina and surgical treatments in West Virginia — are excluded from coverage for everyone, regardless of their gender identity. They claimed only a subset of transgender people suffer from gender dysphoria, a diagnosis of distress over gender identity that does not match a person’s assigned sex.
Before offering pharmaceutical or surgical intervention, medical guidelines call for thorough psychological assessments to confirm gender dysphoria before starting any treatment.
In his opinion, Gregory said that in his view, gender dysphoria is “so intimately related to transgender status as to be virtually indistinguishable from it.”
“We hold that gender dysphoria, a diagnosis inextricable from transgender status, is a proxy for transgender identity,” the judge wrote. “And coverage exclusions that bar treatments for gender dysphoria bar treatments on the basis of transgender identity by proxy.”
