Multiple left-leaning states have been forced to suspend the coverage of transgender procedures in state Medicaid programs, following a federal rule that eliminated federal contributions for “sex-rejecting procedures” on minors in Medicaid and CHIP. Announced in August, the final rule by the Centers for Medicare & Medicaid Services (CMS) took effect on 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 concluded.

The CMS rule affects at least 28 states plus Washington, D.C. that explicitly require Medicaid coverage for transgender procedures on minors, CMS found. In 2023, Medicaid spent some $30.6 million on gender dysphoria treatment for individuals aged 6-18.

“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,” insisted CMS Administrator Dr. Mehmet Oz. “Children deserve our protection, not experimental interventions that pose serious risks and convey no proven benefits.”

Rather than providing its own health care option, the federal Medicaid agency primarily functions by heavily subsidizing state-run Medicaid health insurance systems. Federal funding accounted for 69% of all Medicaid expenses in FY2023 and 65% in FY2024.

Thus, eliminating federal funding for transgender procedures on minors transfers a substantial fiscal burden to states if they wish to continue covering these procedures. Some states, even those with pro-transgender administrations, have elected to suspend coverage of these procedures, at least for now.

On September 24, Steve Ford, director of Virginia’s Department of Medical Assistance Services (DMAS), issued a notice to providers that, “in accordance with a new federal final rule for dates of service on or after October 13, 2026, DMAS will no longer cover gender dysphoria services for Medicaid members under the age of 18, and CHIP members under the age of 19.” The one exception was a six-month period for tapering off of the drugs, as allowed by the federal rule. Ford also stated that “coverage of mental health services” was unaffected, consistent with the federal rule.

When asked about the decision, Virginia Governor Abigail Spanberger (D) responded with sullen resignation. “This is not a question of whether or not our administration is making a choice to pull back funds,” she said. “This is a question and an example once more of a federal government and Trump Administration changing access to healthcare.” Spanberger added that her office was “looking at every option available” to address the situation.

Colorado found itself in a similar predicament. The Colorado Department of Health Care Policy and Financing (HCPF) suspended health insurance coverage for transgender procedures for minors on October 13, when the new rule took effect, saying that it was “working on a plan to support impacted members and their providers through these changes, in coordination with the Attorney General’s Office.”

The HCPF could cover the procedures under its own budget, it said, but that decision would “require legislative action,” and the state legislature is not scheduled to meet again until January.

This suggestion shows that the states most committed to continuing transgender procedures for minors do have a way to circumvent the federal rule. In fact, some states were already prepared for it. In Massachusetts, the administration instantly announced plans to cover transgender procedures for minors exclusively with state funds.

This announcement is possible because the state had already established an “Affirming Health Care Trust Fund” for just such a circumstance. As of July, that fund held $8.5 million. In 2024, Massachusetts spent $3.6 million on all transgender services for minors. This figure includes allowable spending on mental health services, but $2.6 million was spent on cross-sex hormones alone.

Likewise, the California Department of Health Care Services announced that transgender procedures for minors would be funded exclusively by Medi-Cal. The state had already stockpiled $66 million to cover abortion procedures, transgender procedures, and any other state priorities that cannot be funded with federal dollars.

Thus, the Trump administration has successfully eliminated taxpayer funding for transgender procedures on minors at the federal level, thus protecting federal taxpayers from indirectly subsidizing these harmful treatments. This decision has forced some pro-transgender state administrations to follow suit, at least temporarily. However, states captured by transgender ideology can still choose to force their taxpayers to fund these procedures, and some of them have already done so.