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Cost Analysis of Transgender Healthcare in the Military

May 23, 2018

In June of 2016, former Defense Secretary Ashton B. Carter removed one of the final barriers to military service by announcing new rules that would allow transgender individuals to openly serve in the military.[1] Prior to this, transgender people would have been discharged or otherwise separated from the military just for their gender under Department of Defense Instruction (DODI) 6130.03: Medical Standards for Appointment, Enlistment, or Induction in the Military Services.[2] Just one year later, in July 2017, President Donald Trump tweeted that the U.S. “will not accept or allow transgender individuals to serve in any capacity in the U.S. military” because the military “must be focused on decisive and overwhelming victory and cannot be burdened with the tremendous medical costs and disruption that transgenders in the military would entail”.[3]

As of October 2017, Judge Colleen Kollar-Kotelly of the Federal District Court for the District of Columbia temporarily blocked the ban on transgender people serving in the military, which was set to take effect in March 2018. She stated that “there is absolutely no support for the claim that the ongoing service of transgender people would have any negative effect on the military at all. In fact, there is considerable evidence that it is the discharge and banning of such individuals that would have such effects”.[4] As three federal courts have ruled against the Trump administration’s ban, transgender people have been allowed to continue serving.[5] However, the arguments surrounding the kinds of support the government provides transgender military personnel have continued to evolve on the basis of perceived financial strain. The catalyst for President Trump’s controversial decision – the debate over whether the military (and taxpayers) should be footing the bill for covering transgender service members’ medical care – will likely not disappear. Economic analysis of transgender military personnel health care costs can lead one to a logical conclusion on whether these expenses pose an undue burden that justifies the termination of coverage.

To gauge the size of the supposed burden placed on government funds by transgender healthcare, one can first compare the amounts of money spent covering treatments that are medically of equal or lesser importance. A RAND Corporation analysis found that that only $2.4 to $8.4 million annually, out of an estimated Department of Defense (DoD) defense budget of $49.3 billion (in 2014), goes towards gender-related care for transgender service members; for perspective, this is approximately 0.017% of the Department’s total expense.[6] News sources have been quick to compare the military’s spending on transgender healthcare to its spending on other treatments many deem far less necessary than transition-focused medical services, most notably, the erectile dysfunction prescription medication Viagra. According to data from the Defense Health Agency, the DoD spent $41.6 million on Viagra specifically, and $84.24 million total on erectile dysfunction prescriptions generally, in 2014.[7] Thus, the government spends ten times more covering the needs of one gender for one specific issue than it does covering the needs of several genders for a wide range of conditions that have measurable impacts on mental health. As shown, providing non-emergent medical care related to family health/planning issues is not a problem. When measuring the burden placed on the military by its coverage of transgender people’s emergent medical care, one should also examine long-term savings these immediate costs may bring.

The economic burden of transgender health care costs for military personnel to the government can further be defined through a cost breakdown analysis. According to a 2015 study in the New England Journal of Medicine, the overall estimated cost of transgender health care is $4.2-$5.6M annually, out of the military’s $48.8B annual budget for 2017. Moreover, of the 12,800 transgender service members eligible for medical care, approximately 188 service members are expected to utilize transition-related care per year. More specifically, these transition-related costs amount to a monetary cost of $438 per transgender service member yearly, including costs of both hormone distribution as well as gender reassignment surgery. This adds up to 22 cents per service member monthly when spread out among the entire service force.[8] Using the Department of Defense’s Fiscal Year 2017 budget for military health of $48.88 distributed across 9.4 million beneficiaries, one can calculate healthcare costs for the average service member as being 5191.49 per year. Thus, the additional $438 required by service members who choose to undergo transition amounts to an increase in their total individual healthcare costs of only 8.43%. Furthermore, previous research shows that when transgender services members are treated with the medical care they require, they have improved mental health. This then lowers these treated personnel’s future healthcare costs due to fewer incidences of mental health-related issues down the line.[9]

Without access to these healthcare services, transgender service members may suffer from gender dysphoria.[10] People with untreated gender dysphoria often suffer from dissociative symptoms because of gender-related sense of strangeness, including a blurred sense of identity, depression, and anxiety.[11] According to a study in Psychiatry Research, individuals with untreated gender dysphoria have a 45.8% likelihood of having major depressive episodes.[12] Research shows that the cost per stress claim, referring to individuals’ claims if they experience undue stress from work that prevents them from working at their full capacity, average at approximately $12,000 per case of military service members.[13] Given the strong correlation between depression and untreated gender dysphoria, the costs of not covering transgender healthcare in the military outweigh the costs associated with untreated gender dysphoria. Assuming that only transgender service members that have major depressive episodes will have stress claims and given the monetary cost of stress claims, the cost of untreated transgender service members would be $5,496 per transgender service member yearly, which far exceeds the $438 cost of transition-related care per transgender service member yearly.[14] This monetary burden is ten times greater than that of the costs covering transgender care for hormones and gender transition surgery for transgender personnel in the military.

The cost of covering care, including both hormones and gender-reassignment surgery, for transgender members of the military is less than the cost of untreated gender dysphoria in transgender members of the military. These comparably high costs of untreated gender dysphoria stem from the costs of providing therapy related to stress and depression, conditions that transgender people who do not receive proper medical care face at alarming rates.[15] Because individuals who suffer from mental health disorders are less likely to re-enlist, many transgender people may leave the military.[16] In the most extreme case that almost all would leave by choice or by force under President Trump’s alleged ban, the cost to replace transgender service members would be 100 times greater than current estimates for the annual cost of providing them transition-related care, setting back the United States $960 million, according to a report by the Palm Center.[17] Thus, the low expense of funding the health care of transgender service members does not justify the termination of coverage.

Given recent court decisions, it is unlikely that President Trump’s ban on transgender people’s service will be instated. However, the definition of necessary versus unnecessary care for transgender personnel is still heavily debated. Following developments in the U.S. government’s stance on necessary medical care will likely advance more than one argument regarding transition-related healthcare in the military over the next few years.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

References

  1. https://www.nytimes.com/2016/07/01/us/transgender-military.html

  2. https://www.researchgate.net/publication/266423271_Medical_Aspects_of_Transgender_Military_Service

  3. https://www.usatoday.com/story/news/politics/2017/07/26/trump-no-transgender-individuals-military/511858001/

  4. https://www.nytimes.com/2017/10/30/us/military-transgender-ban.html>

  5. http://www.chicagotribune.com/news/nationworld/politics/ct-rnc-transgender-military-20180202-story.html

  6. https://www.rand.org/pubs/research_briefs/RB9909.html

  7.https://www.militarytimes.com/pay-benefits/military-benefits/health-care/2015/02/13/dod-spends-84m-a-year-on-viagra-similar-meds/

  8. http://www.nejm.org/doi/full/10.1056/NEJMp1509230#t=article

  9. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4977075/

  10.https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4977075/

  11.https://www.ncbi.nlm.nih.gov/pubmed/25656174/

  12.https://www.ncbi.nlm.nih.gov/pubmed/25656174/

  13. https://search.proquest.com/openview/8f3aa5988df4c1b5ee4723ab5d53eafe/1?pq-origsite=gscholar&cbl=7561

  14. http://www.nejm.org/doi/full/10.1056/NEJMp1509230#t=article

  15. https://williamsinstitute.law.ucla.edu/wp-content/uploads/AFSP-Williams-Suicide-Report-Final.pdf

  16.http://www.cnn.com/2017/07/26/politics/trump-military-transgender/index.html?sr=twCNN072617trump-military-transgender1001AMVODtop

  17. https://www.palmcenter.org/trumps-transgender-ban-cost-960-million-say-navy-professors-new-report/

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