The Trump administration finalized a rule on Tuesday that prohibits two major federal health programs from funding gender-affirming medical treatments for minors. The policy applies to Medicaid and the Children’s Health Insurance Program (CHIP), barring federal cost-sharing for puberty blockers, hormone therapy, and surgeries intended to treat gender dysphoria in individuals under age 18 for Medicaid and under age 19 for CHIP.
The administration cited what it termed weak evidence of benefit and risks of irreversible harm as the basis for the restriction. The Centers for Medicare and Medicaid Services (CMS) stated the 1965 Medicaid statute, which requires care to serve the "best interests" of beneficiaries, provides the authority for this action. This interpretation is currently being challenged in an Oregon federal court by Democratic state attorneys general who argue the rule exceeds federal power and dictates medical standards that should be regulated by states.
Under the new rule, children currently receiving hormone therapy through these programs will be granted a six-month period to taper off treatment. However, this provision does not extend to surgeries or puberty blockers. CMS Administrator Dr. Mehmet Oz stated the move is intended to protect children, while major medical organizations, including the American Academy of Pediatrics and the American Medical Association, maintain that these healthcare decisions should remain between families and medical professionals.
For families in the 14 states and the District of Columbia that have "shield laws" protecting gender-related care, the change creates a shift in how these services are financed. Individuals in these jurisdictions may notice their Medicaid or CHIP benefits no longer cover these treatments starting in October. State governments in these areas will face the choice of either ending coverage for these procedures or assuming the full financial cost without federal assistance. CMS projects the rule will reduce total Medicaid and CHIP spending by $235 million over 10 years, consisting of $138 million in federal savings and $97 million in state savings.
The federal savings represent approximately 0.002% of the total federal budget for these health programs over the next decade. Beyond the immediate impact on healthcare bills, the rule sets a precedent for using the "best interests" clause of the Medicaid statute to restrict specific medical treatments at the federal level. The policy is scheduled to be published this Thursday and will become effective in October 2026. Legal challenges remain ongoing as states and advocacy groups contest the administration's authority to implement these funding restrictions.