CMS cuts federal Medicaid and CHIP funding for minors' gender care

Alaska families who cover their children through Medicaid or Denali KidCare will lose federal matching funds for hormonal and surgical gender-transition care beginning Oct. 13, under a final rule issued this week by the Centers for Medicare & Medicaid Services. Children already receiving hormone therapy may keep federal funding for a tapering-off period of up to six months from that date.

The rule bars federal financial participation, the federal match for state Medicaid expenditures, for what the agency calls "sex-rejecting procedures" furnished to children under 18 in Medicaid and under 19 in the Children's Health Insurance Program. CMS defines the term as hormonal or surgical interventions intended to alter physical characteristics to align with a person's experienced gender. The U.S. Department of Health and Human Services says the final rule was issued Aug. 11, capping a process CMS opened in February, when it first proposed restricting Medicaid and CHIP funding for the care.

"The final rule ends the use of federal Medicaid and CHIP funds to pay for these procedures on children and youth," CMS said in its announcement. The agency also said the action "applies only to federal Medicaid and CHIP funding" and does not affect coverage of mental health services.

Children already receiving treatment get a window. Federal funding will remain available "for a tapering-off period of up to six months from the effective date of the final rule for children currently on hormone therapy," CMS said. The rule cites tapering provisions written into state laws in Indiana, Oklahoma, Louisiana and Tennessee, but does not spell out how Alaska's program would wind down care for current patients.

That decision falls to state administrators. States may still cover the services with state-only dollars, without the federal match. The sourced record does not show an Alaska ban on the care, and it has not been established whether the state will use state-only funding to continue coverage for low-income and rural families who rely on public insurance.

CMS grounds the rule in Social Security Act provisions requiring states to safeguard against unnecessary utilization, and in the Supreme Court's 2025 decision in United States v. Skrmetti. The preamble leans on an HHS evidence review, the Cass Review in England, and systematic reviews from Sweden, Finland and Norway questioning the quality of clinical guidelines for pediatric gender dysphoria. CMS also addresses a 2024 HHS rule that had treated gender identity as a form of sex discrimination. That rule was partly vacated by federal courts, but CMS says the new final rule remains valid regardless.

The rule document and the CMS release present the agency's case and do not carry a response from opponents. On the public record, the National Women's Law Center wrote in its February comment that the proposal "would bar the use of federal funding for Medicaid and Children's Health Insurance Program (CHIP) coverage of essential care for transgender youth." The American Public Health Association and the Congressional Equality Caucus have also opposed the restriction.

At a U.S. Senate health committee hearing on the subject in June, one witness told senators the treatments are reserved for adolescents with persistent severe gender dysphoria and called withholding them "really quite cruel."