In a final rule, the Centers for Medicare & Medicaid Services (CMS) has eliminated all Medicaid and CHIP funding for “sex-rejecting procedures” on minors, the agency announced Tuesday. “Current medical evidence does not support a favorable risk/benefit profile for the use of chemical or surgical procedures in children to treat gender dysphoria,” the agency found.

The CMS final rule would eliminate all federal Medicaid and CHIP funding for “sex-rejecting procedures” on minors. The rule will take effect on October 13, 2026. In response to public comments, the rule allows a six-month period whereby federal funds will still be available for children currently taking puberty blockers or cross-sex hormones to wean off the drugs.

“Children deserve our protection, not experimental interventions that pose serious risks and convey no proven benefits,” CMS Administrator Dr. Mehmet Oz declared. “By cutting off federal funds for these sex-rejecting procedures, we’re following the science, saving taxpayer dollars, and, most importantly, protecting children from potentially irreversible harm so they can truly flourish.”

In 2023, Medicaid spent some $30.6 million on gender dysphoria treatment for individuals aged 6-18, according to analysis by CMS. This included $180,553 for the category, “inpatient hospital with surgery” (all in the age range 15-18), and $2,184,142 for the category, “outpatient hospital with surgery” (which included $23,534 for children aged 13-14 and $15,526 for children aged 12 or younger). The remaining payments included $4.8 million for “professional services hormone therapy” and $23.5 million for “prescription drug hormone therapy.”

“States that had not banned gender dysphoria treatments for children as of 2023 accounted for 76 percent of spending, including 92 percent of inpatient treatment with surgery and 87 percent of outpatient treatment with surgery,” the CMS analysis reported. Based on these data and other calculations, CMS estimated the final rule would save the federal government ($138 million) and state governments ($97 million) a combined $235 million over the next 10 years (2027-2036).

Since 2021, 27 states in the U.S. plus Puerto Rico have enacted laws protecting minors from gender transition procedures, including surgeries, cross-sex hormones, and puberty blockers.

However, some state legislatures paid less attention to whether their own state budget was part of the problem. According to the pro-transgender Movement Advancement Project, only 16 states and two territories (Puerto Rico and the U.S. Virgin Islands) explicitly exclude gender transition procedures from state Medicaid coverage, while three additional states (Arkansas, Mississippi, and North Carolina) do so only for minors. Three more states (Alabama, Indiana, and Hawaii) lack a clear or explicit policy, while 28 states and D.C. explicitly require Medicaid to cover gender transition procedures.

Five states find themselves in categories both for and against gender transition procedures. On the one hand, the states have prohibited gender transition procedures as dangerous for minors. On the other hand, the states explicitly cover gender transition procedures through Medicaid, thus sponsoring procedures the states have found to be dangerous. These five states are: Montana, North Dakota, New Hampshire, Utah, and West Virginia.

Much like taxpayer funding for abortion, taxpayer funding of gender transition procedures (including Medicaid coverage) requires many taxpayers to indirectly fund activity to which they have strong moral objections. Since state Medicaid programs are heavily subsidized by the federal government, this means federal tax dollars have subsidized gender transition procedures, including for minors, in more than half of U.S. states.

In a January 28, 2025 executive order, President Trump launched an effort aimed at “Protecting Children from Chemical and Surgical Mutilation.” “Across the country today, medical professionals are maiming and sterilizing a growing number of impressionable children under the radical and false claim that adults can change a child’s sex through a series of irreversible medical interventions,” the order stated. “This dangerous trend will be a stain on our Nation’s history, and it must end.”

Accordingly, Trump ordered the HHS secretary to “take all appropriate actions to end the chemical and surgical mutilation of children, including” through “Medicare or Medicaid conditions of participation or conditions for coverage.”

HHS and CMS took an intermediate step toward that goal in November 2025, when it finalized a 400-page report showing that the scientific evidence in favor of so-called “gender-affirming care” is exceedingly poor, citing recent European reviews like the Cass Report, which has steered the U.K. away from the procedures.

The CMS final rule “relied on the research identified in the HHS Review, the Cass Review, and multiple other research initiatives on the current state of medicine in this field.”

In a signal that the CMS rule took policy in exactly the direction he intended, President Trump declared his endorsement of the final rule on Truth Social.

“Today, at my direction, Dr. Mehmet Oz announced that Medicaid will NO LONGER fund gender transition surgeries and hormones for minors,” he wrote. “We are not going to pay for our innocent children to undergo these barbaric surgeries and practices, which result in unthinkable and irreversible harm to their young bodies. … Just think about all of the young, innocent, and perhaps confused children who will be spared!”

Trump indicated that he regarded the policy position as a political winner, concluding his post, “Please remember this when you are casting your vote in the Midterm Elections in November.”

Now that CMS has adopted a final rule, the hard work truly begins. In April, the medical watchdog group Do No Harm published a paper warning that “Healthcare Providers May Skirt Coding Rules to Get Paid for Child Sex Changes.” The paper demonstrated how medical providers can easily miscode a patient’s diagnosis and prescriptions to skirt laws or obtain insurance coverage in providing gender transition procedures to minors.

For instance, the Campaign for Southern Equality advises doctors to diagnose a patient with “E34.9 Endocrine disorder, unspecified,” rather than “F64.9, Gender identity disorder, unspecified,” to dupe insurance providers. Do No Harm observes that “Planned Parenthood of Southeastern Pennsylvania explicitly states that it uses endocrine disorder codes ‘in order to meet the needs of most insurance companies and patients’ and only ‘occasionally’ uses gender identity disorder codes.”

Thus, CMS has taken a major step toward ending all federal funding of “sex-rejecting procedures.” However, the full efficacy of the policy will only be determined by how vigorously it is enforced. The adoption of this policy may signal many more health care fraud investigations just over the horizon.