3/10/2010

In 2001, the City and County of San Francisco ("San Francisco") became the first major U.S. employer to publicly remove discriminatory transgender access exclusions in its health insurance plans for employees, retirees and their dependents in order to explicitly cover medically necessary treatment for transgender transition.

San Francisco's "Transgender Benefit" began in July 2001 and covers treatment — including surgeries — related to the process of "sex reassignment," when these are part of a treatment plan conforming to the World Professional Association of Transgender Health's Standards of Care, the international standards for medical treatment of transsexualism gender incongruence or gender dysphoria. Psychotherapy and hormone therapy are insured under the psychotherapy and pharmacy benefits of San Francisco's general health plans.

With limited existing claims data in 2001, fears regarding high costs and utilization rates were addressed by intentionally overestimating costs. Based on a "worst case" scenario model the plan structure both limited the transgender benefit's total reimbursement per person and implemented surcharges for all employees to offset projected costs.

The original fears quickly proved to be vastly overstated. After reviews in 2004 and 2006, limits on the transgender benefit were raised and the surcharges eliminated. Advocates have called for an updated review and reconsideration of benefit limitations. Notably, San Francisco's plans do not yet cover the full range of treatment indicated by WPATH's SOC.

"Despite actuarial fears of over-utilization and a potentially expensive benefit, the Transgender Health Benefit Program has proven to be appropriately accessed and undeniably more affordable than other, often routinely covered, procedures."
— San Francisco's Human Rights Commission's 2007 Statement

Detailed information on San Francisco's Transgender Benefit

• Estimating Cost and Utilization for the "Worst Case" (1997-2001)
• Total Claims Experience and Plan Evolution, By Year (2001-2006)
• Actual Cost and Utilization (2001-2006)

Key Insights

• No premium increase: there has been no increase in overall premiums or plan costs attributable to the transgender benefit.
• Cost of the benefit has been low, with lower amounts of claims paid than predicted. Actuarial data from the first five years shows that costs per-employee were so small that no surcharge was required, and that per-claimant costs averaged well below the predicted maximums.
• Utilization of the benefit has been low, with fewer claims and claimants than predicted. Actuarial data from the first five years shows that San Francisco experienced an actual rate of at least 0.0324 and at most 0.192 claimants per thousand employees per year — considerably lower than initial estimates of 0.946 claimants per thousand employees.
• Adverse selection did not occur. There was no "magnet effect" and a disproportionately large population of transgender people did not enroll under San Francisco's employee health plan as a result of the benefit.
• Value of transparency: reports from San Francisco provided from 2005 to 2007 documenting low utilization and costs for the transgender benefit have proven invaluable for other employers seeking to implement equitable benefits plans.