As if the prospect of federal regulators imposing more benefit mandates was not disconcerting enough, the proposed regulation also invites federal lawsuits to achieve the same end.
The Administration’s strategy begins with the creation of three definitions in the proposed rule that, collectively, redefine and expand the meaning of the word “sex” in the application of anti-discrimination statutes.
First, it defines discrimination “on the basis of sex” as including “sex stereotyping, or gender identity.”[15] Second, it defines “gender identity” as “an individual’s internal sense of gender, which may be different from that individual’s sex assigned at birth.”[16] Third, it defines “sex stereotypes” as referring to stereotypical notions of gender, including expectations of how an individual represents or communicates gender to others, such as behavior, clothing, hairstyles, activities, voice, mannerisms, or body characteristics.
Lest there be any doubt, in the preamble HHS explicitly states: Thus, for example, an issuer that participates in the Marketplace and thereby receives Federal financial assistance, and that also offers plans outside the Marketplace, will be covered by the proposed regulation for all of its health plans, as well as when it acts as a third party administrator for an employer-sponsored group health plan.[8] HHS explains that this sweeping application is “modeled on the definition of ‘Federal financial assistance’ in the regulation implementing Title IX at 45 CFR 86.2(g).”[9] That regulation applies Title IX (one of the statutes referenced in section 1557) to even those educational institutions that only receive federal funds indirectly in the form of fees paid by students receiving federal loans, grants, or scholarships.
Thus, HHS states: [W]e have added language to this proposed definition stating that such funds are Federal financial assistance when extended to the entity providing the health insurance coverage or services, whether they are paid directly by the Federal government to that entity or to the individual for remittance to the entity providing health insurance coverage or services.[10] An analysis of enrollment data from insurer regulatory filings finds that, under these criteria, the regulation’s mandates would be imposed on the coverage of over 164 million Americans with unsubsidized private individual or employer group health insurance.
Thus, any insurer that offers, say, Medicare Advantage plans, Medicaid managed-care plans, or ACA exchange plans would be subject to this regulation.
Furthermore, the regulation would apply to the coverage of all of the insurer’s unsubsidized customers, including even self-insured employer plans for which the insurer provides only administrative services.
Those 164 million Americans have coverage that is issued or administered by one of 181 insurance companies that would be subject to this regulation because those insurers also provide coverage to other individuals under federally subsidized ACA exchange plans, Medicare Advantage plans, or Medicaid managed-care contracts.
In fact, 102 million of those individuals are covered by self-insured employer plans, for which the insurer only “acts as a third party administrator.”[11] Nor can those employers who have maintained their (pre-ACA) plans’ “grandfathered” status escape this proposed regulation, as section 1557 is not one of the sections of the ACA from which grandfathered plans are exempted.[12] Furthermore, because nearly all medical facilities, physicians, and ancillary health care providers receive at least some federal funding, either by treating patients whose care is paid for with federal funds, or from other sources—such as, “meaningful use” payments for adopting electronic health records, research grants from the National Institutes of Health, or federal funding of health professional training programs—HHS expects that this rule will also apply to virtually all medical providers.[13] The rule further stipulates that, as “covered entities,” health care providers must also comply with the rule’s provisions with respect to their own employee health plans.[14] The manner in which this proposed rule would regulate health plans and providers is most clearly illustrated by the Administration’s inclusion in the rule of provisions that explicitly apply to one particular psychological condition.
In this proposed rule, the Administration not only asserts the power to determine what constitutes appropriate medical treatment; it also defines the scope of the rule so broadly that it will apply to virtually all current health plans and medical providers.
This expansive scope is established through several steps.
These stereotypes can include expectations that gender can only be constructed within two distinct opposite and disconnected forms (masculinity and femininity), and that gender cannot be constructed outside of this gender construct (individuals who identify as neither, both, or as a combination of male and female genders).[17] Having thus asserted that “expectations that gender can only be constructed within two distinct opposite and disconnected forms (masculinity and femininity)” is a form of “sex stereotyping,” constituting impermissible discrimination “on the basis of sex,” HHS proceeds to specify in the proposed rule that “a covered entity shall not,” among other things: Otherwise deny or limit coverage, or deny a claim, for specific health services related to gender transition if such denial or limitation results in discrimination against a transgender individual.[18] In other words, any refusal to cover gender transition treatments on the grounds that such treatments are medically inappropriate, or more akin to elective plastic surgery, would constitute prohibited discrimination on the basis of sex.