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STATE OF CALIFORNIA DEPARTMENT OF INSURANCE 300 South Spring Street 12th Floor, South Tower Los Angeles, CA 90013

REG-2011-00023 FINAL STATEMENT OF REASONS GENDER NONDISCRIMINATION IN HEALTH INSURANCE UPDATED INFORMATIVE DIGEST Except as set forth below, the information in the Informative Digest of the Notice of Proposed Action, dated October 14, 2011, remains accurate and requires no updating. Procedurally, on December 29, 2011, a 15-day Notice of Availability of Revised Text and the Amended Text of Regulation was issued in this matter. The proposed regulation was amended to address an issue regarding the scope of the regulation as to its applicability to different types of insurers and also to remove any possible ambiguity regarding the fact that the regulation does not mandate that health insurers provide coverage for any new benefits. The public comment period closed on January 13, 2012. On April 13, 2012, a 15-day Notice of Addition to Rulemaking File was issued. The Department added to the rulemaking file in this matter its Economic Impact Assessment (EIA) and documents upon which the Department relies upon to support the EIA. The public comment period closed on April 30, 2012. Since the time the proposed regulations were originally noticed, Insurance Code sections 10140 and 10140.2 have been amended by A.B. 887 (Atkins, 2011). That bill replaced the reference to Penal Code section 422.56 from those Insurance Code sections with the language that had previously been indicated by the reference to the Penal Code, defining the word sex as used in Insurance Code sections 10140 and 10140.2 as follows: Gender means sex, and includes a person's gender identity and gender expression. Gender expression means a person's gender-related appearance and behavior whether or not stereotypically associated with the person's assigned sex at birth. Additionally, the bill added gender, gender identity and gender expression to the existing list of personal characteristics discrimination on the basis of which is prohibited by Insurance Code section 10140. The proposed regulations thus implement, interpret and make specific Insurance Code section 10140 as amended by A.B. 887 and do not rely exclusively on the 2005 amendments to that section effected by A.B. 1586, Koretz. The 2011 amendments to Insurance Code section 10140 will require that the reference to Penal Code section 422.56 be deleted from the reference notes to Sections 2561.1 and 2561.2 of the proposed regulations, as a change without regulatory effect. May 29, 2012

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Statement of Specific Benefits Anticipated While the number of affected individuals is very small, the CDI concludes that the proposed regulations will significantly improve the health and welfare of transgender insureds who are currently denied coverage equal to that of non-transgender insureds. One of the impacts of the proposed regulations will be to prevent discrimination by prohibiting the denial of coverage for medically necessary treatments provided to transgender insureds if coverage for those treatments is offered to non-transgender insureds under the same policy. Access to these treatments yields significant benefits to transgender insureds and results in only immaterial costs to employers and insurers. The Department has arrived at this conclusion based on the very small population and evidence of similarly low utilization of the kinds of treatments the regulations will ensure that transgender insureds are not prohibited from receiving coverage for as long as the same treatments are also covered for non-transgender insureds. The Departments EIA includes a detailed analysis. The CDI reviewed pertinent journal articles, studies, and reports to determine the benefits of increased access to the treatments referred to above. The direct benefits fall into the categories listed below. Elimination of gender-based discrimination in health coverage The regulations are designed to carry out the purpose of the statute, which is to prohibit insurers from denying a policy or coverage for a benefit included in the policy based on the persons sex, as defined (Stats. 2005, ch. 421, 3). Evidence cited in the Departments EIA demonstrates that transgender insureds being denied coverage, and therefore access to treatments provided to non-transgender insureds, results in a greater likelihood of adverse socioeconomic consequences for these insureds. A single group pre and post study demonstrated improvements in socioeconomic status, employment status in transgender patients after hormonal and surgical treatment. Additional studies conclude that transgender persons have higher employment rates after they have access to treatments available to non-transgender persons and additional studies demonstrate the link between lack of access to treatment and socioeconomic status. The elimination of gender-based discrimination that results in reduced access to health care treatments may also have the positive consequence of mitigating discrimination in other areas of a transgender insureds life including discrimination in housing, employment, and other public accommodations. Increased access to care In addition to the benefits associated with receiving potentially life-saving medically necessary treatments, increased access to care has other direct medical benefits. Refusal to cover treatments otherwise covered for non-transgender insureds results in individuals delaying or forgoing preventive care and treatment that they cannot afford, with the result that they seek care only when their condition becomes acute (and more costly). Current literature shows that people who are denied timely and early access to care have a much higher utilization of emergency and acute care services. These delays drive higher claims costs and result in insureds purchasing policies that do not meet their health care needs. Medical benefits

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Suicide reduction: Studies cited in CDIs EIA demonstrate overwhelming evidence that access to treatments provided to non-transgender insureds and denied to transgender insureds results in significantly higher suicidality rates. This rate, taken together with the estimated costs of a suicide attempt and completion, demonstrate that these regulations could save insurers from the costs associated with suicide, but prevent significant numbers of transgender insureds (relative to the overall insured population) from losing their lives. Improvements in mental health: Evidence cited in the Departments EIA demonstrates that transgender insureds who have access to treatments provided to non-transgender insureds see rates of depression drop and anxiety decrease leading to improved quality of life. This overall improvement and reduction in utilization of mental health services could be a source of cost savings for employers, insurers, and insureds. Reduction in substance use rates: Evidence cited in the Departments EIA demonstrates that transgender insureds who have access to treatments provided to non-transgender insureds have an overall reduction in substance use after receiving treatment. This reduction may result in decreased rates of diseases associated with substance use including lung cancer, liver disease, stroke, heart disease, and HIV. A reduction in substance use will improve the welfare of transgender insureds and potentially produce cost savings for insurers as utilization for treatments of these secondary diseases declines. Higher rates of adherence to HIV care: Evidence cited in the Departments EIA demonstrates that HIV prevalence in the transgender population is significantly higher rates of HIV than the general population (28% in a meta-analysis as compared to a general population rate of .6%). Insureds who have access to treatments provided to non-transgender insureds have higher rates of adherence to HIV care. This is particularly relevant to insurers because it provides evidence that offering the same kinds of treatments provided to non-transgender insureds may reduce the long-term costs of treatment for HIV/AIDS. It is particularly relevant for the welfare of all Californians because HIV positive individuals who comply with treatment regimens stay healthier longer which may result in long-term cost savings to insurers. Furthermore, when treatment is offered, transgender individuals are far less likely to transmit the virus to others resulting in an overall societal benefit. Reduction in self-medication: Evidence cited in the Departments Economic Impact Assessment demonstrates that transgender insureds who do not have access to treatments provided to non-transgender insureds and suffer from dysphoria associated with gender identity disorder sometimes turn to self-medication for relief. Silicone injections, for example, are sometimes used in lieu of treatments covered for non-transgender insureds. A reduction of the rates of self-medication would result in an overall improvement in health and welfare and could potentially result in avoidance of costly complications that are known to result from such self-administered treatments. In addition to benefits to the health and welfare of transgender insureds, employers and insurers may also derive benefits from healthier insureds and see cost savings resulting from decreased rates of substance use, decreased mental health utilization, and decreased suicidality. The proposed regulations are neither inconsistent nor incompatible with existing state regulations.

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Statement of Results of Economic Impact Assessment The Department conducted a thorough analysis of relevant journal articles, studies, and reports related to the impact of ensuring access to treatments available to non-transgender insureds that are denied to transgender insureds on the basis of their gender identity. In its EIA for this matter, the Department estimates that there are between 1,955 and 5,214 insured transgender Californians who could be impacted by these regulations. This translates to between .0052 and .014 percent of California residents. Based on this information and on other information discussed in the EIA, the Department has determined that the adoption of the proposed regulations would have an insignificant and immaterial economic impact on the creation or elimination of jobs, the creation or elimination of new businesses, and the expansion of businesses in the State of California. The Department has also determined that there will be significant benefits resulting from the proposed regulations including: Prevention of discrimination and, specifically, gender-based discrimination in health coverage. Significant medical benefits including: o Suicide reduction, o Improvements in mental health, o Reduction in substance use rates, o Higher rates of adherence to HIV care, and o Reduction in self-medication.

The Department has also concluded that the proposed regulations will potentially improve the health and welfare of a very small class of California residents that have been targets of violence and discrimination. The regulation may impact worker safety, since transgender workers would be in better health and more productive in their work with improved access to health care coverage under the proposed regulation. Based its EIA, the Department has determined that while the proposed regulation will result a significant benefit to the health and welfare of a very small subset of California residents, the aggregate costs and benefits relative to the overall state population are insignificant and immaterial. Alternatives The Department is required to determine that no reasonable alternative considered by the agency or that has otherwise been identified and brought to the attention of the agency would be more cost-effective to affected private persons and equally effective in implementing the statutory policy of prohibit[ing] plans and insurers from denying an individual a plan contract or policy, or coverage for a benefit included in the contract or policy, based on the persons sex, as defined. (Stats. 2005, ch. 421, 3). UPDATE OF INFORMATION CONTAINED IN INITIAL STATEMENT OF REASONS On December 29, 2011 the Department issued a Notice of Amendment to Text of Regulation. A public comment received in response to the originally noticed text of regulations had indicated the presence of a potential clarity problem in the definition of an admitted insurer in Section 2561.2 of the proposed regulations. Accordingly the Department amended the regulations to eliminate the possibility that the

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definition might be misunderstood in the way it apparently had been. Additionally, the Department took the opportunity to remedy one other potential clarity problem present in the originally noticed Text of Regulations. The phrase an admitted insurer was taken by some commenters to include all insurers in the State of California, even though the text of the regulation and the statute the regulation is implementing clearly were intended to affect life and disability insurers, more commonly known as health insurers. The Department amended the regulation to eliminate the possibility that the definition might be misunderstood to be broadly inclusive of all insurers. The phrase in connection with health insurance as defined in subdivision (b) of Insurance Code section 106 was inserted after an admitted insurer to take away any possible clarity issues with regard to the scope and application of the regulation as to which types of insurers were effected. Additionally, it was brought to the attention of the Department that some commenters had read the regulation as creating a new mandated benefit in all health insurance policies in California. This misunderstanding apparently could arise from the illustrative, but not exhaustive or exclusive, list of services in Section 2561.2(d)(1) of the proposed regulation that may be covered under the present proposed regulation. Section 2561.2 prohibits insurers from denying or limiting coverage, or denying a claim, due to the insureds gender identity or for the reason that the insured is a transgender person. The text of the originally proposed regulation was amended to indicate, that in order to come within the purview of subdivision (d) of Section 2561.2, a healthcare service must already be being covered by the particular insurer under the policy in question in instances where that service is not related to gender transition. The amended text of regulation makes clear that an insurer is not required to cover health care services that are comparable to services the insurer already covers; rather, the amended text of regulation requires that, in order to fall within the prohibition of the type of discrimination addressed in subdivision (d), the service itself, and not merely a comparable service, must be covered by the particular insurer under the policy in question in instances where the service is unrelated to gender transition. Amendments were made to the list of services in paragraph (d)(1) of Section 2561.2 in order to make the list more clearly representative of services which are commonly offered to non-transgender insureds by all insurers and that therefore can virtually never be arbitrarily denied to a transgender insured for the reason that that person is a transgender person, absent the discrimination prohibited by Insurance Code section 10140. (Of course, if a particular insurer does not cover a given service in instances where the service is not related to gender transition, nothing in the regulation would prohibit the insurer from denying that service to a transgender person, for any reason, whether or not the service is listed in paragraph (d)(1).) The originally noticed list of services included services which may have been associated exclusively with gender transition. The amended illustrative list of services is more closely aligned to the purpose of citing examples of services that generally are covered by all insurers for non-transgender insureds. The regulations make clear that no health care services that the insurer routinely covers in other circumstances under a given policy may lawfully be denied out of hand to transgender insureds under the same policy for the sole reason that their gender identity is transgender, regardless of whether those services are listed in paragraph (d)(1). The amendments to Section 2561.2 are intended to preclude the possibility that a regulated entity may misread the regulation to incorrectly infer that any particular health service benefit is being mandated; however, if an insurer chooses to provide coverage for a given benefit under a given policy in instances unrelated to gender transition, that insurer

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may not arbitrarily exclude coverage for that benefit to a transgender insured under the same policy just because the insured is a transgender person. Statement of the Problem and Enumeration of Benefits The problem the Department intends to address by means of the proposed regulations is gender discrimination in health insurance, specifically discrimination on the basis of the insureds or prospective insureds actual or perceived gender identity and discrimination on the basis that the insured or prospective insured is a transgender person. The benefits resulting from the proposed regulations include: Prevention of discrimination and, specifically, gender-based discrimination in health coverage. Significant medical benefits including: o Suicide reduction, o Improvements in mental health, o Reduction in substance use rates, o Higher rates of adherence to HIV care, and o Reduction in self-medication.

The benefits of the proposed regulations include the benefits or goals provided in the authorizing statute: to prohibit insurers from denying a policy or coverage for a benefit included in the policy based on the persons sex, as defined (Stats. 2005, ch. 421, 3). Alternatives One alternative to the proposed regulations would be to omit paragraph (d)(1) of Section 2561.2 of the proposed regulations. This section prohibits insurers from denying transgender persons treatments that are provided to non-transgender persons, on the grounds that the person is transgender, as defined. Removing the indicated paragraph (d)(1) would allow insurers to continue to continue to enforce blanket policy exclusions based on an insureds transgender status, while disallowing other forms of discrimination. Policies that arbitrarily exclude coverage for conditions that may be specific to gender identity disorder (GID) where the same treatments are provided under the same policy to non-transgender people are discriminatory. Arbitrarily excluding coverage and treatment for these conditions (where the condition is unique to and, in part, defines the class of people) overtly discriminates against transgender Californians. If the Department were to omit subdivision (d)(1) of Section 2561.2, insurers could continue to deny transgender people access to treatments that are available to non-transgender people, citing as the basis for the denial only the insureds gender identity. Accordingly, the Department has rejected this alternative because it would be less effective in achieving the purposes of the regulation in a manner that ensures full compliance with the authorizing statute. An additional alternative to the proposed regulations was proposed in public comments received by the Department. The Association of California Life and Health Insurance Companies (Stephannie Watkins) suggested that the following phrase be added to the end of subdivision (d)(1) of Section 2561.2: provided those services are medically necessary unrelated to gender transition. To insert this language into the proposed regulation would be to give insurers explicit license to discriminate by arbitrarily denying

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coverage for covered services to a transgender insured, for the reason that insured is a transgender person, without giving the transgender insured the benefit of the medical necessity analysis to which services received by others are routinely subject. The effect of this language would be the same as omitting subdivision (d)(1) altogether, except that insurers license to violate Insurance Code section 10140 would become expressly enshrined in law. Services related to gender transition are, of course, applicable only to individuals of one gender identity: transgender. However, subdivision (a) of Insurance Code section 10140 forbids insurers from issuing insurance under conditions less favorable to the insured than in other comparable cases, except for reasons applicable alike to persons of every race, color, religion, sex, gender identity, gender expression, national origin, ancestry or sexual orientation. The policy of denying only to transgender individuals the same medical necessity analysis that is available to everyone else is a condition that is not applicable alike to persons of every sex or gender identity; the exclusion is uniquely applicable to transgender persons. Clearly this condition is not applicable in the same way to people of any other gender identity and is less favorable to transgender insureds than to all other insureds. Accordingly, the Department has rejected this alternative, as well, because it would be less effective in achieving the purposes of the regulation in a manner that ensures full compliance with the authorizing statute. UPDATE OF MATERIAL RELIED UPON The Department relies upon the following data; technical, theoretical or empirical studies; reports; or similar documents in adopting the proposed regulations. 1. California Department of Insurance. Economic Impact Assessment: Gender Nondiscrimination in Health Insurance, dated April 13, 2012. 2. Ainsworth, T., & Spiegel, J. (2010). Quality of life of individuals with and without facial feminization surgery or gender reassignment surgery. Quality of Life Research, 19, 10191024. 3. American Psychiatric Association. (1994). Diagnostic and Statistical Manual of Mental Disorders, 4th Edition. Washington, D.C.: American Psychiatric Association. 4. Baker, A., Kesteren, P. V., Gooren, L., & Bezemer, P. (1993). The prevelence of transexualism in the Netherlands. Acta Phsychiatrica Scandinavica(87), 237-238. 5. Bodlund, O., & Gunnar, K. (1996). Transsexualism General outcome and prognostic factors: A 5 year follow-up study of 19 TSs in the process of changing sex. Arch. Sexual Behavior, 25, 303-316. 6. Bostwick, W., & Kenagy, G. (2001). Health and social service needs of transgendered people in Chicago. Chicago: Jane Addams College of Social Work, University of Illinois at Chicago. 7. Census Bureau. (2010). Profile of General Demographic Characteristics, California. Retrieved from Table DP-1: www.census.gov 8. Centers for Disease Control. (2010). Fact Sheet: The Medical Cost Associated with Suicide in the United States. Retrieved 2012, from http://www.cdc.gov/ncipc/factsheets/images/Medical_Costs.pdf; 9. City and County of San Francisco Human Rights Commission, The. (2007). Report on San Francisco City and County Transgender Health Benefit. San Francisco: The City and County of San Francisco. 10. City of Portland, Oregon. (2011). Mayor Sam Adams. Retrieved from http://www.portlandonline.com/mayor/?a=351892&c=49278

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11. Clements-Nolle, K., Marx, R., & and Katz, M. (2006). Attempted suicide among transgender persons: The influence of gender-based discrimination and victimization. Journal of Homosexuality, 53(3), 53-69. 12. Cole, C., O'Boyle, M., Emory, L., & Meyer, W. (1997). Co-morbidity of Gender Dysphoria and Other Major Psychiatric Diagnoses. Archives of Sexual Behavior, 26(1), 13-19. 13. Corso, P., Mercy, J., Simon, T., Finkelstein, E., & Miller, T. (2007). Medical Costs and Productivity Losses Due to Interpersonal and Self-Directed Violence in the United States 32(6) : 474-482. Am J Prev Med, 32(6), 474-482. 14. De Cuypere, G. E. (2006). Long-term follow-up: psychosocial outcome of Belgian transsexuals after sex reassignment surgery. Sexologies, 15, 126133. 15. Fox, L., Geyer, A., Husain, S., Della-Latta, P., & Grossman, M. (2004). Mycobacterium abscessus cellulitis and multifocal abscesses of the breasts in A transsexual from illicit intramammary injections of silicone. Journal of the American Academy of Dermatology, 50, 450. 16. Freiboth, R. (2012, March 6). Transgender Benefit Insurance Premium Increase Data. (email communication). (C. o. Manager, Ed.) Seattle, WA. 17. Gorton, R. N. (2011). The Costs and Benefits of Access to Treatment for Transgender People. Prepared for the San Francisco Department of Public Health, San Francisco. 18. Green, J., Wilson, A., & Fidas, D. (2011). Transgender Inclusive Health Benefits: Costs, Medical Models & Best practices. Dallas. 19. Haas, A., Eliason, M., Mays, V., Mathy, R., Cochran, S., D'Augelli, A., . . . Diamond, G. (2011). Suicide and suicide risk in lesbian, gay, bisexual, and transgender populations: Review and recommendations. Journal of Homosexuality, 58(1), 10-51. 20. Hage, J. (2001). The devastating Outcome of Massive Subcutaneous Injection of Highly Viscous Fluids In Male to Female Transsexuals. Plastic and Reconstructive Surgery, 734. 21. Hodgkins, D. (2012, March 15). Transgender Benefit Insurance Premium Increase Data. (email communication). Berkeley, CA: City of Berkeley, Department of Human Resources. 22. Human Rights Campaign. (2012). Corporate Equality Index 2012. Washington, D.C.: Human Rights Campaign. 23. Institute of Medicine of the National Academies. (2011). The Health of Lesbian, Gay, Bisexual, and Transgender People: Building a Foundation for Better Understanding. National Academies, Board on the Health of Select Populations. Washington, D.C.: The National Academies Press. 24. Kaiser Family Foundation, The. (2009). State Health Facts. Retrieved 2011, from http://www.statehealthfacts.org/profileglance.jsp?rgn=6 25. Komenaka, I. (2004). Free silicone injection causing polyarthropathy and septic shock. The Breast Journal, 10(2), 160. 26. Kuiper, M., & Cohen-Kittenis, P. (1988). Sex reassignment surgery: A study of 141 Dutch transsexuals. Arch Sex Behav, 5, 439-457. 27. Manning, J. (2012, April). University of California Transgender Benefit Cost and Utilization Letter. University of California Transgender Benefit Review 2012(email communication). Oakland, CA, United States: University of California, Office of the President. 28. Murad, M., Elamin, M., Garcia, M., Mullan, R., Murad, A., Erwin, P., & Montori, V. (2010). Hormonal therapy and sex reassignment: a systematic review and meta-analysis of quality of life and psychosocial outcomes. Clinical Endocrinology, 72, 214-231. 29. Olson, J., Forbes, C., & Belzer, M. (2001, February). Management of the Transgender Adolescent. Archives of Pediatrics and Adolescent Medicine, 165(2), 171-176. Retrieved from http://archpedi.ama-assn.org/cgi/content/full/165/2/171

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30. Operario, D., & Nemoto, T. (2010). HIV in Transgender Communities: Syndemic Dynamics and a Need for Multicomponent Interventions. Journal of Acquired Immune Deficiency Syndrome, 55(2), S91S93. 31. Rakic, Z., Starcevic, V., Maric, J., & Kelin, K. (1996). The Outcome of Sex Reassignment Surgery in Belgrade: 32 Patients of Both Sexes. Archives of Sexual Behavior, 25, 515. 32. Reback, C., Simon, P., Bemis, K., & Gatson, B. (2001). Los Angeles Transgender Health Study: Community Report. Los Angeles. 33. Rehman, J., Lazar, S., Benet, A., Schaefer, L., & Melman, A. (1999). The Reported Sex and Surgery Satisfactions of 28 Postoperative Male to-Female Transsexual Patients. Archives of Sexual Behavior, 71. 34. Smith, Y., Van Goozen, S., Kuiper, A., & Cohen-Kettenis, P. (2005). Sex Reassignment: Outcomes and Predictors of Treatment for Adult and Adolescent Transsexuals. Psychological Medicine, 35, 89-99. 35. Spade, D., Arkles, G., Duran, P., Gehi, P., & Nguyen, H. (2010). Medicaid Policy & GenderConfirming Helathcare for Trans Prople: An Interview with Advocates. Seattle Journal for Social Justice, 8(2), 497-514. 36. Sylvia Rivera Law Project, The. (2011). Eliminating the Medicaid Exclusion for Transition-Related Care in NYS: Good Public Health, the Right Thing to Do and Ultimately a Cost-Saving Measure. New York: Sylvia Rivera Law Project. 37. Tannis, J., Grant, J., & Mottat, L. (2010). Injustice at Every Turn: A Report of the National Transgender Discrimination Survey. Washington, D.C.: National Center for Transgender Equality and National Gay and Lesbian Task Force. 38. Transgender Law Center. (2008). The State of Transgender California: A report on the 2008 California Transgender Economic Health Survey. San Francisco: The Transgender Law Center. 39. United Nations Programme on HIV/AIDS (UNAIDS) and World Health Organization (WHO). (2007). AIDS Epidemic Update. Retrieved from http://data.unaids.org/pub/EPISlides/2007/2007_epiupdate_en. 40. Wilson, A. (2012). Transgender-Inclusive Health Benefits: Costs, Data for Cost Calculation. Jamison Green and Associates. 41. World Professional Association for Transgender Health, The. (2011). Standards of Care for the Health of Transexual, Transgender, and Gender Nonconforming People, 7th ed. The World Professional Association for Transgender Health. 42. Xavier, J. (2000). The Washington Transgender Needs Assessment Survey. Washington, D.C.: The Administration for HIV and AIDS of the District of Columbia Government. 43. Yang, B., & Lester, D. (2007). Recalculating the Economic Cost of Suicide. Death Studies, 31, 351 361. 44. Zucker, K., & Lawrence, A. (2009). Epidemiology of Gender Identity Disorder. International Journal of Transgenderism, 11(1), 8-18

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MANDATE UPON LOCAL AGENCIES AND SCHOOL DISTRICTS The Commissioner has determined that the proposed regulations will not impose a mandate upon local agencies or school districts. REQUIRED DETERMINATION REGARDING ALTERNATIVES The Department has determined that no alternative considered by the agency would be more effective in carrying out the purpose for which the regulation is proposed, would be as effective and less burdensome to affected private persons than the adopted regulation, or would be more cost effective to affected private persons and equally effective in implementing the statutory policy. The Department considered two alternatives to the proposed regulations: (1) omitting paragraph (d)(1) of Section 2561.2 of the proposed regulations and (2) inserting language into that paragraph that would give insurers license to discriminate by arbitrarily denying coverage for covered services to a transgender insured, for the reason that insured is a transgender person, without giving the transgender insured the benefit of the medical necessity analysis to which services received by others are routinely subject. Neither of the alternatives considered by the Department would be more effective, or as effective, in carrying out the purpose for which the regulation is proposed or would be equally effective in implementing the statutory policy. As stated in the Informative Digest of the Notice of Proposed Action, the Department is implementing the proposed regulations to prohibit and prevent the denial of coverage or denial of claims for medical services based upon an insured or prospective insureds actual or perceived gender identity. Both alternatives would be less effective than the proposed regulations in carrying out this purpose, since both alternatives would allow, rather than prohibit or prevent, the denial of coverage based upon an insureds gender identity. Similarly, the statutory policy is to prohibit plans and insurers from denying an individual a plan contract or policy, or coverage for a benefit included in the contract or policy, based on the persons sex, as defined. (Stats. 2005, ch. 421, 3). (Sex, as defined in Penal Code section 422.56, and now in Insurance Code section 10140, includes gender identity.) Accordingly, both alternatives would be less effective than the proposed regulations in implementing the statutory policy since, again, both alternatives would allow, rather than prohibit, the denial of coverage based upon the insureds gender identity. The above analysis provides sufficient basis for making the determination regarding alternatives required by paragraph (a)(4) of Government Code section 11346.9. However, in its EIA the Department has demonstrated that the impact on costs to insurers due to the adoption of the proposed regulations would be immaterial. (The EIA is incorporated into this Final Statement of Reasons by this reference, pursuant to subdivision (d) of Government Code section 11346.9.) At the same time, the alternatives would significantly reduce the regulations effectiveness in (1) carrying out the purpose for which the regulation is proposed; (2) implementing the statutory policy; and (3) improving suicide rates, substance use rates, the rate of adherence to HIV care and the rate of self-medication, among transgender individuals, as set forth in the EIA and in this Final Statement of Reasons. Consequently, the Department has determined that neither of the alternatives considered is more cost-effective than the proposed regulations.

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It is conceivable that the proposed alternatives could lessen any adverse economic impact of the proposed regulations on small businesses. Small businesses that cover a proportion of, or all of, the cost of their employees health insurance are adversely impacted by material health insurance premium rate hikes. However, in its EIA the Department has demonstrated that the impact on premiums due to the adoption of the proposed regulations would be immaterial, ranging from zero to one fifth of one percent of premium, at most. Accordingly, the Department has rejected the proposed alternatives because the proposed regulations adverse economic impact on small businesses will be immaterial, whereas either of the alternatives would significantly reduce the regulations effectiveness in (1) carrying out the purpose for which the regulation is proposed; (2) implementing the statutory policy; and (3) improving suicide rates, substance use rates, the rate of adherence to HIV care and the rate of self-medication, among transgender individuals, as set forth in the EIA and in this Final Statement of Reasons. The benefits of the proposed regulation identified pursuant to paragraph (3) of subdivision (a) of Government Code section 11346.5 are set forth in this Final Statement of Reasons, beginning on page 2.

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SUMMARY OF AND RESPONSE TO COMMENTS Commenter Ted Angelo and Stefanie Watkins for Association of California Life and Health Insurance Companies, John Manyan for Association of California Life Insurers [Written comments (Tab K)]; Verbatim Synopsis or Verbatim Text of Comment In written comments, the commenters support the goal of ensuring proper health care is given to all Californians but object to the proposed regulation text because the commenters believe the proposed regulations both exceed and conflict with statutory authority. (1) While the title of the regulations references health insurance, as does the Statement of Reasons, there is concern the regulations may be read to apply to actions taken by any admitted insurer in connection with an insurance policy. There is a lack of clarity as to whether the scope of these regulations is meant to apply more broadly than to just health insurance. The regulations should therefore be amended to apply only to actions taken in connection with health insurance as defined under Section 106 (b) of the Insurance Code. If this is not addressed, the proposed regulations would conflict with and extend beyond Insurance Code Section 10140(a), particularly as applied to the issuance of life, disability income, and long term care insurance policies. Such clarification would also be in line with the Departments apparent intent in proposing the regulations as reflected in both the title and the Statement of Reasons. (2) It is unclear what specific purpose these regulations would serve. As referenced in Insurance Code Sections 10140 and 10140.2, the law is very clear that in connection with the issuance of health insurance, an insurer may not deny, cancel, limit or refuse to issue or renew an insurance policy on the basis of an insureds or prospective insureds actual or perceived gender identity, nor deny and or require a payment or premium that is based in whole or in part on an insureds or prospective insureds actual or perceived Response
The proposed regulations do not exceed nor conflict with the statutory authority granted the Insurance Commissioner in California Insurance Code sections 10140 and 10140.2. The Commissioner is proposing adoption of regulations which seek only to implement and make specific the statutory prohibitions against discriminatory treatment of insureds in the marketplace by insurers based upon an insureds sex (as defined by the Penal Code and now in subdivision (h) of Insurance Code section 10140), gender, gender identity and gender expression. (1) The commenters comments regarding amending the text of the regulation to specifically limit its applicability to health insurers is accepted and a 15 day notice was promulgated with language amending the text to state applicability of the regulation is limited to health insurance as defined in subdivision (b) of Insurance Code section 106. (2) No change. The regulations will serve the specific purpose of prohibiting discrimination in health insurance. The commenters fail to identify any laws or regulations that currently exist which specifically address the issue of transgender discrimination in health insurance, and instead make only general suppositions without specific citations. The cited statutes do not define gender identity, actual gender identity or perceived gender identity or, in fact, even use the terms gender identity and perceived gender identity; it only in the proposed regulations that that these terms are defined and used. Accordingly, the regulatory language complained of here is not merely duplicative of current law. (3) No change. The need for the proposed regulations is demonstrated in the numerous comments submitted in writing and at the public hearing detailing problems

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Commenter

Synopsis or Verbatim Text of Comment gender identity. As such, Sections 2561 (a) and (b) are simply duplicative of current law and therefore unnecessary. (3) Additionally, as health insurers, our members take the issue of discrimination very seriously and take great steps to ensure strict adherence to the law so that everyone is treated fairly with dignity and respect. As such, they do not engage in any of these practices. (4) While Insurance Code Section 10140 (f) clearly states that nothing in this section shall be construed to limit the authority of the Commissioner to adopt regulations prohibiting discrimination because of sex, marital status or sexual orientation, at no point does it grant authority to the Commissioner to unilaterally mandate health insurance coverage beyond what is currently prescribed by the Legislature. (5) The Initial Statement of Reasons states, To the degree that coverage for any of these services is denied based on a persons gender identity or because the person has or has been diagnosed with GID (or GD), or because the procedure is for the purpose of gender transition or of treating GID (or GD), illegal gender discrimination has occurred and the insurer thus committed a statutory violation. We believe this statement regarding proposed section 2561.2 (d) (1) intends to require coverage for services related to Gender Identity Disorder (GID) or Gender Dysphoria (GD) in virtually any circumstance, and therefore goes far beyond the scope of California Department of Insurances (CDIs) authority. (6) It also appears that the Department of Insurance intends to require all health insurers that provide services such as hormone therapy, hysterectomy, mastectomy, breast reconstruction, surgical treatment for gynomastia, reconstructive surgery for genital injuries or abnormalities,

Response
transgender individuals have in both obtaining health insurance coverage, maintaining coverage and having claims paid by insurers. (4) No change. The proposed regulations do not create a mandate, nor do they require coverage beyond what is currently prescribed by the Legislature. The language of the proposed regulation clearly states that only if a procedure is otherwise covered for an insured that is not of transgender status or identity, then the same procedure cannot be denied out of hand to transgender people because of their transgender status or gender identity. Because the regulations address discrimination on the basis of gender identity, they are within the authority of the commissioner to adopt regulations prohibiting discrimination. (5) No change. The regulations do not require the coverage of services related to GID or GD in every circumstance. The regulations specifically only address circumstances where coverage for services that may be related to GID or GD is excluded on the basis of gender identity in situations where the services are or would otherwise be covered for insureds that are not diagnosed with GID or GD. The quoted statement from the Initial Statement of Reasons (the ISOR) speaks for itself. Nothing in the ISOR or the Text of Regulation is intended to require coverage for services related to GID or GD in virtually any circumstance. However, an insurer must use the same procedures to deny coverage to individuals diagnosed with GD or GID or for services that are for the purpose of gender transition as the insurer uses to deny coverage to other individuals or for services unrelated to gender transition; a blanket exclusion that applies only to individuals of one particular gender identity is clearly not, in the language of the statute, applicable alike to persons of every gender identity. Ins. Code 10140, subd. (a). (6) No change. The regulations do not broach the subject

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Synopsis or Verbatim Text of Comment and vocal training as covered benefits under medically necessary circumstances for a non-transgender individual, to also cover those services for a transgender individual diagnosed with GID or GD regardless of medical necessity. It should be noted that although GID and GD are both referenced on the American Psychiatric Associations Diagnostic and Statistical Manual (DSM IV) list, they are specifically not included in the list of nine severe mental illnesses for which Californias Mental Health Parity Law requires insurers and HMOs to provide equal coverage. However, California law only provides for equal coverage for the following disorders: Major depression Bipolar (manic-depressive) disorder Panic disorder Anorexia Bulimia Obsessive-compulsive disorder Autism or Pervasive Developmental Disorder Schizophrenia Schizoaffective disorder Childrens severe emotional disturbances While we appreciate the Departments intent to protect consumers against discriminatory practices, we disagree that Insurance Code Section 10140, as amended by AB 1586, was intended to mandate coverage for gender transition services related to GID or GD. Further, there is no legislative record indicating that this was the intent of the Legislature. (7) If the Legislatures intent was to require insurers to cover gender transition services they would have simply amended the statute to include Gender Identity Disorder as a mandated benefit or amended the Mental Health Parity

Response
of altering any insureds medically necessity standards and in fact do not even use the term, medical necessity, or medically necessary, in any part of the regulation. Nothing in the regulation can be construed as altering or affecting an insurers application of any medical necessity standards the insurer may have in place. Rather, the proposed regulations encourage insurers to apply the same medical necessity analysis to an individual diagnosed with GID or GD as the insurer applies to individuals not so diagnosed. As for legislative intent, one of the sponsors of AB 1586, Assemblyman Ammiano, supports this regulation. Uncodified language in AB 1586 (Koretz, 2005) states that the purpose of the bill was to prohibit insurers from denying an individual a policy, or coverage for a benefit included in the policy, based on the persons sex, as defined. The commenter correctly points out that neither GID or GD is enumerated in the list of conditions for which equal coverage is required. However, the regulations simply do not say that equal coverage must be provided for GID or GID. Rather, sex, gender, gender identity, and gender expression (all as defined) are in fact all listed in subdivision (a) of Insurance Code section 10140 along with race, color, religion and national origin as personal characteristics on the basis of which discrimination in health insurance is forbidden in California. Sickle-cell disease, for instance, is also absent from this list, but a blanket exclusion on treatment for this condition, which affects mainly individuals of SubSaharan African descent, would nonetheless be discrimination prohibited by Insurance Code section 10140. Accordingly, there is no need to mandate coverage for this condition. Again, the regulations do not mandate coverage for any particular services; however, if an insurer opts to provide coverage for a particular service for reasons unrelated to gender transition, it

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Synopsis or Verbatim Text of Comment law to reference it as one of the illnesses for which both HMOs and insurers must provide equal coverage. As such, the issue would have been considered within the normal legislative process among the other mandates introduced each year, and would have been accompanied by a California Health Benefits Review Program (CHBRP) analysis which would have clearly enumerated the additional cost to insurers. Thus, the Department has exceeded their authority. (8) These regulations also limit a health insurers ability to process and adjudicate claims, and thus exceed the Commissioner's authority. Specifically, Section 2561.2 (d) (2) would impede an insurers ability to properly evaluate and/or deny claims based on medical necessity. (9) Most routine health care services, including those that are gender-specific, are not initially reviewed for medical necessity prior to being performed. Only after the bill is submitted for payment do insurers have the opportunity to evaluate the claim. These regulations hinder the ability to accurately process, pend, and/or deny claims due to erroneous billing by the provider, and eliminate the ability to screen for provider fraud. (10) This subdivision prohibits designating an insureds or prospective insureds actual or perceived gender identity, or the fact that an insured or prospective insured is a transgender person, as a pre-existing condition for which coverage will be denied or limited. This exceeds the Commissioners authority in that it would give gender identity preferential treatment over other medical conditions for which a pre-existing condition exclusion or limitation would apply. There is no authority under existing statute that specifically addresses pre-existing condition exclusions for gender identity. (11) Finally, in terms of overall comments on the proposed

Response
cannot arbitrarily deny coverage for that same service to a transgender person, solely on the basis that the service is related to gender transition. (7) No change. The regulations do not mandate that GID or GD services or benefits be covered under all policies in California. Quite the contrary, the regulation only addresses situations where services are already provided for non-transgender insureds but are denied to transgender insureds for the reason that they are transgender. The services and benefits addressed in this regulation already exist under many of the policies in question and the regulations address any discriminatory approval of claims for benefits or services that are covered for non transgender insureds when a transgender insured applies for them. Further, there was nothing abnormal about the legislative process that produced AB 1586 (Koretz, 2005). (8) No change. The regulation does not in any way address or seek to change the way insurers process or evaluate claims based on medical necessity. The regulation has no wording that even remotely addresses medical necessity or even touches on an insurers procedures for processing claims, except to say that claims for services to be rendered to a transgender person when the same services are covered for other insureds cannot be summarily denied solely on the basis of the insureds gender identity; rather, claims under a transgender insureds policy must be processed in a way that is no less favorable to the insured than in other, comparable cases, except for reasons alike to persons of every gender identity. (9) No change. The regulation would not change or affect the way insurers process routine claims. The regulation does not force insurers to evaluate claims before they are submitted, as the commenter implies, because the regulation does not address or impede the process of handling and evaluating claims by an insurer. Insurers

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Synopsis or Verbatim Text of Comment regulations, ACLHIC would note that the Department has not adequately addressed the market impacts of this regulation. Similar regulations have not been adopted or proposed by the Department of Managed Health Care (DMHC), which oversees health care service plans. Furthermore, these services are currently not covered by state or federal health care programs, resulting in an additional expense on only a limited segment of premium payers (i.e., California small/midsize employers and individuals who purchase CDI policies). Thus, these proposed regulations would impact only one part of the health insurance market, placing health insurers regulated by the CDI at a competitive disadvantage to the extent that insurers will be required to cover benefits that their competitors do not.

Response
already process and evaluate claims against a statutory backdrop that prohibits discrimination against insureds based on a wide variety of prohibited factors, such as race, ethnicity, national origin, etc. The regulation seeks to prevent insurers from engaging in discriminatory practices in benefits and claims approval against transgender insureds, but the integration of transgender insureds into the claims processing system provided for other insureds would not change the claims processing or handling procedures of insurers when insurers are already prohibited from discriminating based on the aforementioned list of factors. Nothing in the regulation prohibits an insurer from investigating fraudulent or erroneous billing. Further, the rulemaking record contains complaints from insureds stating that coverage for routine health care services was denied either due to the sexspecific nature of the service or because the insurer falsely assumed that the procedure was being performed for the purpose of gender transition when the diagnosis code clearly stated otherwise. For example, one transgender man received a billed for removal of his ovaries AFTER a provider accidently caused sepsis during a colonoscopy. The letter cited lack of coverage for gender transition services as the reason for denial when the treatment was necessary based on the diagnosis of sepsis in the insureds ovary. The treatment had nothing to do with gender transition, yet it was denied because the treatment just happens be one also used for gender transition. The Department believes that the regulations will provide useful guidance for insurers so that they can avoid this type of discriminatory practice. Additionally, there is no reason why the proposed regulations should impact insurers fraud interdiction practices; nothing in the regulations impacts insurers methods of screening for fraud. (10) No change. California Insurance Code 10140(a), as

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Synopsis or Verbatim Text of Comment

Response
amended by AB 1586 changes the definition of sex to include an insureds or prospective insureds perceived or actual gender identity. This section of the California Insurance Code prohibits insurers from denying or failing to issue coverage on like terms based on a persons sex, religion, race, color, national origin, ancestry or sexual orientation; and as amended by AB 1586 also adds gender identity to the list. Nothing in the regulation gives preferential treatment to any particular medical treatment; the regulation merely makes clear the existing prohibition on discrimination in health insurance on the basis of gender identity. The Commissioner has the authority under Insurance Code section 10140 to promulgate the proposed regulations. The statutory authority is the language in subdivision (a) of that section forbidding insurers from issuing insurance under conditions less favorable to the insured than in other comparable cases, except for reasons applicable alike to persons of every gender identity. Policies with pre-existing condition exclusions based on Gender Identity Dysphoria clearly are issued under conditions less favorable to transgender persons; these particular exclusions clearly are not applicable alike to persons of other gender identities. (11) No change. The number of insureds who would be impacted by the regulation is extremely small. Insurance Code section 10140 is specific to entities regulated by the Department of Insurance. Action or inaction by the Department of Managed Healthcare is not a prerequisite for the Insurance Commissioner to promulgate regulations implementing statutes in the Insurance Code. When the proposed regulations become effective, all insurers that are operating in the individual and small group markets and that are regulated by CDI will need to comply with the regulations. ACLHICs concern may be that when this regulation becomes effective, some transgender individuals will switch their health coverage from DMHC-regulated products, which will not be subject

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Synopsis or Verbatim Text of Comment

Response
to the regulations, to CDI-regulated products, which will be subject to the regulations, thus creating a much greater impact on premiums. In its EIA, the Department estimates there are a maximum of about 5,200 transgender insureds in California that may be impacted by the proposed regulation. This includes insureds in the large group, as well as the small group and individual, markets. Assuming the transgender population is distributed uniformly across all market segments, the maximum number of transgender insureds covered under individual and small group policies would be about 17% of 5,200, or approximately 910. (Based on information cited in the EIA, not quite one fifth of the insured population, or roughly 5.2 million of the 30 million insured Californians, is currently covered in the privately-funded individual or small group market.) Some of these individuals have policies that are currently regulated by DMHC. Relying on information cited in the EIA, Department actuaries estimate the prevalence of transgender policyholders in the individual and small group markets for CDI-regulated business to be about 0.015%. Under the worst case scenario, in which we assume that all the transgender individuals currently covered under DMHC-regulated products would switch to CDI-regulated products, the prevalence of the transgender population among the individual and small group market who are covered by CDI-regulated products would rise to 0.03% at most, or three one-hundredths of one percent. However, it is highly unlikely that we will see significant migration following the implementation of the proposed regulation. Several factors would tend to hinder a migration from DMHC- to CDI regulated products. For example, in the individual market, switching policies would require being able to satisfy applicable underwriting requirements, which many individuals could not do, for reasons unrelated to gender

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Synopsis or Verbatim Text of Comment

Response
identity. Additionally, insureds may be deterred from switching by premium cost considerations. Finally, a certain number of transgender individuals currently covered under DMHC-regulated products may be content with the care they receive under those products and accordingly would not voluntarily switch. This is true even among that subset of transgender insureds consisting of individuals requiring gender transition services. (There is anecdotal evidence that Kaiser, for instance, whose products are regulated by DMHC, has in fact covered gender transition services (see Tab 5).) We therefore find that the conclusion arrived at in the EIA remains sound. That is to say, under even the worst case scenario any impact of the proposed regulation on premiums for CDI-regulated policies sold in individual and small group market would be immaterial. As stated in the EIA, the Department does believe that there may be a possible spike in demand in the first few years after the adoption of the proposed regulation due to the possible existence of some current unmet demand, which may lead to a discernible increase in claim costs in the near-term following the adoption of the proposed regulation. We believe, however, that the very small size of the impacted population will make the magnitude of any such increases insignificant and immaterial. The Department will thoroughly address the economic impact on insurers of the proposed regulations, in an economic impact assessment, upon which the commenter will be given an opportunity to comment. (1) Thank you. (2) No change. The commenters recommended amendment to the regulation would exceed the Commissioners authority under California Insurance Code 10140. An additional term that would broadly and non-specifically require insurers to pay for all medically

Kate Kendell, National Center for Lesbian Rights, [Written comments (Tab L)] and Ilona Turner, National
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(1) The commenters support the regulation and believe

that the regulations will provide much needed clarification of non-discrimination laws. The commenters know of routine and unlawful denials of needed medical care based upon an individuals transgender status. (2) The commenters also believe that the law prevents discrimination against transgender individuals in the

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Commenter Center for Lesbian Rights,[testimon y at hearing]: Synopsis

Synopsis or Verbatim Text of Comment provision of any care. In both written comments and live testimony, the commenters also suggested that the regulation be amended to include a part (d)(3) that would state Any other medically necessary treatment.

Response
necessary treatment would go beyond the scope and authority of Insurance Code section 10140. Further, the inclusion of the suggested language would at least strongly imply that all the other services listed or referred to earlier in Subdivision (d) of Section 2561.2 of the proposed regulations are, in fact, medically necessary. However, the proposed regulations take no position with respect to the question of whether any particular service is or is not medically necessary. Thank you.

Tom Ammiano, California State Assemblyman, [Written comments (Tab M) and testimony at hearing]; Synopsis

Eva-Genevieve Scarborough and the Missioner Board of First Congregational Church, [Written comments (Tab N) and testimony at hearing];
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Assemblyman Ammiano formally endorses the proposed regulations. The Assemblyman knows of transgender individuals who have had gender based services, covered for other individuals, denied to them because of their transgender status. Gender discrimination is causing far too many insureds to receive substandard care or no medical care. The Assemblyman believes that the regulations will help clarify Insurance Code section 10140 and help prevent nondiscrimination in insurance benefits. Assemblyman Ammiano supports these regulations and believe it will help end persistent discrimination against transgender people. The commenters support the regulation and believe that AB 1586 clearly prohibits discrimination based upon gender identity. The commenters regularly see members of their congregation who are transgender suffer extreme anxiety and depression over their attempts to receive proper medical treatment. Their transgender members are regularly discriminated against in their attempts to access basic medical care. The commenters have learned of situations where transgender individuals have sought unlicensed and unregulated medical practitioners for treatment and surgery as a result of the discrimination and suffer horribly botched medical procedures. The

Thank you.

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Commenter Synopsis Anthony Wright, Executive Director of Health Access California, [Written comments (Tab O)]; Synopsis Becky Benton [Written comments (Tab P)];

Synopsis or Verbatim Text of Comment commenters fully support the regulations and expect them to help reduce health disparities. The commenter supports the regulations and the amendment of the definition of sex to include gender identity and gender-related behavior. They recognize that there have incidences of discrimination in the past and believe that the regulation will prohibit discrimination against transgender persons.

Response
Thank you.

Matt Wood, Staff Attorney, Transgender Law Center [Written comments (Tab Q) and testimony at hearing];
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Thank you. The commenter supports the regulation and believes there is widespread discrimination against transgender Californians by health insurers. She states that insurers create red tape and hurdles as barriers to necessary medical care for transgender people. Anxiety and stress are ever present for her when medical claims are submitted and affect when and how transgender people access health care. She states that the regulations will help ensure access to medical care for transgender people and may help in curbing suicides and black market medical procedures for transgender people. The commenter fully supports the regulations and expects them to help reduce health disparities experienced by transgender Californians. The commenter believes there is widespread discrimination Thank you. against transgender individuals in California from insurers. The commenter is transgender person and has had difficulty getting a claim for a covered benefit approved by his insurer. The commenter, who is a transgender woman, had difficulty getting insurance coverage for treatment for an ovarian cyst because he was in the insurers system as a man. Eventually the commenter was able to get the treatment covered but was warned by the insurer that the

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Commenter Synopsis

Synopsis or Verbatim Text of Comment commenter couldnt have it both ways and that the insurer would not pay for coverage for both genders. The commenter believes the regulations would help prevent what happened to the commenter from happening to other transgender individuals. The commenter also believes that AB 1586 prohibits the use of gender identity in coverage and claims paying decisions. The commenter believes transgender individuals are held to a higher standard to prove the need for health care simply because of their transgender identity. The commenter fully supports the regulations and expects them to reduce health disparities. Thank you. The commenter supports the regulation and believes there to be serious and persistent discrimination that transgender Californians experience. The commenter believes the regulations will clarify legal obligations on insurers to treat all Californians fairly. The commenter believes AB 1586 prohibits the use of gender identity as a basis for coverage decisions. The commenter also believes that transgender individuals are held to a higher standard by insurers in the need to prove their health care is medically necessary. The commenter regularly sees the effects of insurance discrimination against transgender individuals. The discrimination causes high levels of anxiety. The commenter has received calls from a female-to-male transgender personwho has had gynecological claims denied because of his transgender male status. This person suffered anxiety, frustration and humiliation and thus regularly skipped preventive care appointments.

Response

Ben Hudson, Executive Director, Gender Health Center [Written comments (Tab R) and testimony at hearing]; Synopsis

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Synopsis or Verbatim Text of Comment The commenter fully supports the proposed regulations and expects them to help reduce health disparities experienced by transgender Californians. The commenter supports the proposed regulations. The commenter is a physician with approximately 140 transgender patients. The commenter states that discrimination based upon gender identity is the norm amongst his transgender patients despite AB 1586. His transgender patients have difficulty procuring insurance and those that do have a hard time having covered benefits approved. The commenter states many transgender individuals pay for care out of pocket for fear that their insurer will learn that they are transgender. The commenter believes that there is systemic discrimination against transgender consumers and pervasive insurance discrimination has a chilling effect on transgender individuals access to health care. The commenter supports the regulation and believes there is serious and persistent discrimination against transgender Californians. The commenter believes the regulations will clarify the legal obligation of insurers to treat Californians fairly regardless of gender identity. The commenter believes that AB 1586 clearly prohibits the use of gender identity for coverage decisions, but despite the fact that AB 1586 was passed 6 years ago the discrimination against transgender people still exists, with transgender individuals refused policies, denied treatments and being held to a higher standard to prove their health care is medically necessary. The commenter fully supports the proposed regulations.

Response

Nick Gordon, MD, LyonMartin [Written comments (Tab S) and testimony at hearing]; Synopsis

Thank you.

Rebecca Gonzales, National Association of Social Workers [Written Comments (Tab T)]; Synopsis

Thank you.

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Commenter Kate OHanlan, MD, Laparoscopic Institute for Gynecologic Oncology [Written Comments (Tab U, V, W) and testimony at hearing]; Synopsis

Synopsis or Verbatim Text of Comment Transgender patients have a disparately difficult time getting healthcare needs met. Many transgender male patients seek to get hysterectomies of their ovaries due to pain. Most of the men already have health insurance coverage but still have a disparately difficult time getting insurers to pay for the procedure. The same procedure for the same reasons for women are routinely approved by insurers. When a transgender male seeks coverage for such procedures the insurers investigate with extra care and require personal phone calls from the commenter before they approve coverage. In women, the same procedure is routinely covered and paid for with minimal documentation. Did not know that gender identity has been banned as a basis for coverage decisions for six years. Routinely sees treatments denied to transgender individuals which are offered to non-transgender individuals. The insurers also hold transgender people to a higher standard to prove their health care is medically necessary simply because they are transgender. The commenter has not seen any insurance company call transgender status a pre-existing condition. The commenter has included scientific articles supporting the assertion that gender identity is set before birth. Evidence is overwhelming that transgender surgeries and medical treatments improve quality of life and in other situations are generally insurance will pay for it. Numerous physician associations, including the AMA, have endorsed insurance coverage for gender related issues. This regulation will begin to reduce health disparities

Response
Thank you.

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Commenter Sam Cooper [Written comment (Tab X)]; Synposis

Synopsis or Verbatim Text of Comment experienced by transgender Californians. The commenter is a State of California employee and believes the regulation will affect his quality of life as a male-to-female transgender individual. The commenter is dependant on hormone replacement therapy. In June 2011, visited his physician and for the first time transsexualism was entered as his diagnosis. He subsequently went to a laboratory for blood draws and testing. His benefits claim for the procedures was denied by the insurer. The insurer told the commenter that his claim was denied because of transsexualism and undetermined sexual history. Since that time the insurer has covered the cost of the hormones but denied coverage for monitoring his health condition.

Response
Thank you.

Shane Snowdon, Director for the Center for LGBT Health & Equity at Univ. of Cal. San Francisco [Written comments (Tab Y) and testimony at hearing]; Synopsis

This is discriminatory medical practice. Strongly supports the proposed regulation and believes the regulation will make a big difference for transgender Californians who have suffered discrimination from health insurers. The University of California health plans provide by far the most extensive coverage for transgender health in the nation. From this perspective the proposed regulations would be enormously helpful in preventing denials of medically necessary treatment, as determined by their medical providers, not be denied to transgender individuals because of the actual or perceived transgender status. Transgender individuals already suffer high rates of discrimination in society. Is aware of hundreds of cases of discrimination against transgender patients in health care.

Thank you.

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Synopsis or Verbatim Text of Comment Some insurers do pay for transgender coverage for medically necessary care, but other insurers create arduous processes for getting medically necessary care covered for transgender individuals Even though UC plans cover transgender services, many transgender individuals face scrutiny, delays and denials of coverage they would not have faced if it were a non-transgender context. Heartily supports the regulations, and the regulations will prompt more extensive training of insurers benefit advisers, claims representative and reviewers and increase training for all appropriate insurer employees on the subject. The proposed regulations will do much to ensure that transgender patients will be treated with equity and respect. (1) Supports the regulation because the regulations provide much needed clarification on the types of discriminatory acts that violate California Insurance Code 10140. AB 1586 was enacted to address pervasive discrimination faced by transgender people, including denial of insurance coverage and denial of particular treatments and services under health care plans. The Transgender Law Center has found that 30% of transgender Californians have postponed care for illness or preventive care due to disrespect or discrimination from doctors or health care providers. In health insurance particularly, transgender people face unique and daunting barriers to coverage based on irrational bias, discrimination, and lack of knowledge about the current state of medical knowledge and practice regarding transgender people. AB 1586 sought to prevent insurers from denying insurance policies to transgender people simply because they are transgender and from excluding coverage for treatment or procedures that would otherwise be covered for non-transgender individual.

Response

Kristina Wertz, Legal Director, Transgender Law Center [Written comments (Tab Z, 1, 2)]; Synopsis

(1) Thank you. (2) No change. The commenters recommended amendment to the regulation which would specifically state Any medically necessary treatment be covered because the commenters believe the list of procedures in the regulation is too restrictive. However, the recommended additional language is not needed, because the language of the regulation as written already specifically states that the list of procedures is not exhaustive, limiting or exclusive, but is just an illustrative list that does not preclude the potential inclusion of other procedures. (3) Thank you.

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Synopsis or Verbatim Text of Comment Discrimination in health insurance is still prevalent. Transgender insureds are often face discrimination in the terms of the policy. Transition related care often explicitly excluded in insurance policies even though they are covered for non transgender insureds. Insurers also deny transgender individuals coverage not just for transition related procedures but also gender specific care such as pap smears for transgender men and prostate exams for transgender women. The regulations will provide critical guidance about how to give substance to antidiscrimination protection.
(2) The law prohibits insurers from discriminating against

Response

transgender people in the provision of any care, not just specific types of care, therefore would recommend addition of part (d)(3) stating Any other medically necessary treatment..
(3) Examples of insurance discrimination based on Gender

Zoe Kuznia [Written comment (Tab 3)]; Synopsis

Identity are attached. Supports the regulation. There is widespread discrimination against transgender Californians by health insurance carriers despite AB 1586. Insurance companies continue to discriminate against insureds on the basis of gender identity by failing to provide coverage or medically necessary care that would be available but for ones transgender status. Physician recommended a course of treatment to consolidate her gender identity. Insurer denied coverage because it was deemed not medically necessary. As a result has had to obtain treatment at personal cost. Affected quality of life.

Thank you.

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Synopsis or Verbatim Text of Comment Despite AB 1586 prohibiting the use of gender identity as a basis for coverage decisions, transgender people are still refused policies and denied treatment. Fully support the regulations. Supports the regulation. There is persistent discrimination that transgender Californians experience from health insurers. Despite AB 1586, transgender people are still refused policies and denied treatments offered to non-transgender individuals and are held to a higher standard to prove that their health care is medically necessary. Insurers have put up barriers to providing coverage of medically necessary treatment for transgender employees of the City of Berkeley. Specific regulations are required to get insurers to cover health care services related to gender transition when that coverage is available for comparable health services. Transgender employees continue to face arbitrary and discriminatory denials. Fully supports the regulation and expects them to reduce health disparities experienced by transgender Californians.
Thank you.

Response

David Hodgkins, Human Resources Director, City of Berkeley [Written comments (Tab 4)]; Synopsis

Zander Keig [Written comments (Tab 5)]; Verbatim

I am writing to express my strong support for the proposed regulations implementing AB 1586. I have experienced this type of discrimination directly. In 2005 I became insured through my wife's employer, the City & County of San Francisco. We chose Kaiser Permanente as our carrier. With Kaiser, I was able to obtain a continued prescription

Thank you.

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Synopsis or Verbatim Text of Comment for depo-testosterone and received culturally-sensitive medical care. In 2008, I initiated the process to undergo sex reassignment surgery, as a transsexual man, and was approved. Kaiser approved me for out-of-network services, since no Kaiser surgeon was able to perform the necessary surgeries: scrotoplasty, phalloplasty and vaginectomy. Over the course of 14 months (10/08-01/10), I traveled to Arizona several times to undergo the multi-staged surgical process. Most of these procedures were performed while on COBRA and Cal-COBRA with Kaiser. Then later in 2010, when our Cal-COBRA insurance expired, my wife and I applied for another Kaiser family policy and I was denied (she was not), because of my "transgender surgeries," (they said) which had been approved by and financed through Kaiser just a few short months prior. I was without health insurance for several months, which put my access to necessary hormonal treatments in jeopardy and created additional stress in my life, while attending graduate school full time in preparation for becoming a clinical social worker. As a US Military Veteran, I am able to access free medical care through the Veterans Affairs Healthcare System, however there is a much lower level of transgender awareness, so my comfort with seeking services is limited to necessary care. I would have preferred to remain a Kaiser member, where I would have continued to see the same physician I had seen

Response

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Synopsis or Verbatim Text of Comment since 2008, who had followed my care and treated me with dignity.
Thank you. On behalf of the Gay and Lesbian Medical Association (GLMA), I write to you today in support of regulations proposed by the California Department of Insurance that specify the forms of gender discrimination that violate California Insurance Code section 10140. Because these regulations will improve health outcomes for transgender Californians, GLMA strongly encourages the adoption of these regulations. GLMA is the worlds largest and oldest membership association of lesbian, gay, bisexual and transgender healthcare professionals. Founded in California in 1981 as the American Association of Physicians for Human Rights (AAPHR), GLMAs mission is to ensure equality in health care for LGBT individuals and health care professionals, and we work to achieve this mission by using the expertise of our medical and health professionals in education, policy and advocacy, patient education and referrals, and the promotion of research. Nearly 20% of GLMAs members are based in California. As an organization of health professionals who often serve and provide care for transgender individuals, we see the health risks associated with lack of therapeutic treatment. The lack of treatment is often a result of transgender people being refused health insurance policies, denied therapeutic treatments offered to non-transgender people or held to a higher standard to prove that their health care is medically necessary simply because they are transgender. We have also seen the benefits and effectiveness of mental health therapies, hormone replacement therapy, sex reassignment surgery and other therapeutic options to care

Response

Hector Vargas, JD, Executive Director, Gay & Lesbian Medical Association [Written comments (Tab 6)]; Verbatim

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Synopsis or Verbatim Text of Comment for transgender patients. Treatment can also prevent or alleviate other significant health problems that insurance providers or public health options would need to address if a patient goes untreated. Respected health professional organizations, such as the American Medical Association, The Endocrine Society and, most recently, the American College of Obstetricians and Gynecologists, have adopted policies to address the health needs of transgender individuals, including access to care. The AMA, for example, has adopted policy supporting nondiscrimination in the care of transgender patients and removing financial barriers to care. The AMA policy specifically supports public and private health insurance coverage for treatment of gender identity disorder as recommended by the patients physician. These policies have all recognized the medical necessity of providing these therapeutic treatments. The proposed regulations will provide important clarification of the legal obligation of insurers to treat all Californians fairly and equally regardless of gender identity. Although Insurance Gender Non-discrimination Act (AB 1586) clearly prohibits the use of gender identity as a basis for coverage decisions, transgender individuals continue to face discrimination in health insurance resulting in adverse consequences to their health and well being. GLMA fully supports the proposed regulations to ensure that medically necessary therapeutic treatments are available to transgender Californians to reduce the significant health disparities they experienced. We appreciate your leadership and that of your staffs to ensure equal access to insurance and healthcare for all Californians.

Response

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Commenter Steffanie Watkins, Legislative and Regulatory Advocate, Association of California Life and Health Insurance Companies [Written comments (Tab 12)]; Verbatim

Synopsis or Verbatim Text of Comment The Association of California Life and Health Insurance Companies (ACLHIC) has received the revisions dated December 30th, 2011 to the above cited regulations, and wishes to provide the California Department of Insurance (CDI) with additional comments regarding the revisions.
(1) We would like to acknowledge and thank the

Response
(1) Thank you. (2) No change. The regulations would not hinder an insurers ability evaluate and process claims for benefits based upon medical necessity. The regulations are silent as to this. The regulations also do not create a new mandated benefit. The regulations only address situations where the same services are provided to nontransgender insureds but are denied to transgender insureds, for the reason that their gender identity is transgender. (3) No change. The list of services in the regulations are illustrative, as the regulations state, and are indeed not meant to be an exhaustive list. The list is an illustrative list of services that if covered for non-transgender individuals that should be covered for transgender individuals. This is well within the statutory authority and goes toward preventing discriminatory practices based upon gender identity, whether actual or perceived. (4) No change. The regulations do not seek and do not in fact mandate that those services in the illustrative list must be provided to transgender insureds on all policies issued in California which is what a mandated benefit would be. Instead, the regulations, clearly state that the services in the illustrative list, and potentially other services, cannot be denied out of hand to transgender insureds for the reason of their gender identity if those services are provided to non-transgender insureds. Medical necessity is not addressed in the regulation and would remain under the purview of an insurers existing claims handling practices. Further, nothing in the regulations would require insurers to cover treatment for conditions that are not medically necessary. The Department has not approved discriminatory practices. Prior to the adoption of the proposed

Department for addressing our concerns with respect to the applicability of Section 2561.2. by clarifying that the section does not apply to all admitted insurers but instead applies only to health insurers as defined in subdivision (b) of Insurance Code Section 106. We recognize that the Department also attempted to address some of our concerns regarding Section 2561.2 (d) by paring down the list of services referenced in (d)(1).
(2) However, our concerns remain as stated in our

November 29, 2011 comment letter on the originally proposed regulations (attached) with regard to the scope of Section 2561.2 and whether the language in subsections (a), (b) and (d) of that section would require coverage for services related to Gender Identity Disorder (GID) or Gender Dysphoria (GD) in virtually any circumstance regardless of medical necessity. It also implies that gender transformation surgery and services would have to be covered as a mandated new benefit.
(3) First, subdivision (d) prohibits insurers from denying

or limiting coverage, or denying a claim, for services including but not limited to the following list of services in (d) (1). Because subdivision (d) precludes limiting the services that must be provided to those that are specifically stated in (d) (1), the amendments could still be interpreted
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Synopsis or Verbatim Text of Comment as potentially including those services that are stricken in the amended version of the regulations as well as many others.
(4) Further, (d) (1) still implies that services must be

Response
regulations, the Department could not have implemented a standard of general application regarding these exclusions, since such a regulatory regime would have constituted unlawful enforcement of an underground regulation. Absent such a standard, some policy reviewers may have not recognized certain policy provisions as including impermissible imbedded discrimination. Mistaken approval of such provisions by the Department does not ratify discrimination. The proposed regulation will ensure that all reviewers will recognize such discriminatory policy language by providing a uniform interpretation of Insurance Code section 10140, including the 2011 amendment to the section that expressly lists gender identity as one of the bases upon which discrimination is prohibited. This will make it abundantly clear that policy exclusions that are less favorable to transgender insureds than to other insureds under the same policy are not applicable alike to persons of every gender identity, and are therefore proscribed by Insurance Code section 10140. Accordingly, on and after the date the proposed regulations are adopted the Department shall disapprove policies containing discriminatory language. (5) No change. The regulations do not create a mandate; please see response to (4). (6) No change. The commenters proposed amendment to the regulation language is unduly and unnecessarily restrictive. The illustrative list of services, is as it plainly states, for illustration purposes. The list was not intended to be and should not be construed to be an exhaustive list. (7) No change. The commenters proposed amendments would unduly affect medical necessity decisions that would be made later by insureds and insurers, and would

provided regardless of medical necessity and would potentially expand those benefits to include gender transition surgery itself, whether or not that is a covered benefit. As noted in our previous letter, under current practice, as approved by the Department of Insurance, gender transition services are generally excluded from most contracts unless a rider has been purchased for these services (Benefit: Gender Reassignment Surgery). Thus the language in (d)(1) would require a new mandated benefit that would go beyond nondiscrimination or parity since those services under general medical benefits would only be covered should they be medically necessary to treat a particular disease or illness.
(5) Therefore, subsection (d) and (d) (1) would go beyond

the Departments stated goal to protect consumers against discriminatory practices, and instead would potentially mandate additional benefits into health insurance policies. While we appreciate the Departments goal, we disagree that Insurance Code Section 10140, as amended by AB 1586 (Koretz, 2005), was intended to mandate coverage for gender transition services related to Gender Identity Disorder (GID) or Gender Dysphoria (GD). In fact, the Legislature included uncodified intent language in AB 1586 that makes it clear that the antidiscrimination provisions of Insurance Code Section 10140 were never meant to impose a new mandated benefit. (A full discussion of our reasoning is included in our initial comment letter on the proposed regulations as attached).
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Synopsis or Verbatim Text of Comment

Response

make the Department complicit in illegal discrimination perpetrated by the insurers it regulates. As the With that in mind, we would like to offer the following commenter had previously mentioned, AB 1586 never amendments to Section 2561.2 (d) and (d) (1) to clarify that the proposed revised regulations will not impose a new intended for the statute or any regulations promulgating from said statute to address the question of medical mandated benefit. In addition, we are proposing a new necessity. The commenters proposed amendments here subsection (e) to incorporate the uncodified intent language would contradict the uncodified language of AB 1586. To from the authorizing statute, AB 1586 (Koretz, 2005) to limit the ambit of Insurance Code section 10140 in the underscore the changes proposed to be made to subdivision way commenter suggests would be to violate the (d). Please note that the changes are in bold and in red: consistency standard of the Administrative procedure act. Insurance Code section 10140 prohibits discrimination on Adopt Section 2561.2. Discrimination on the Basis the basis of gender identity. To limit the protection afforded by that statute to situations where a service is of Actual or Perceived Gender Identity. medically necessary for reasons unrelated to gender transition would be to codify illegal discrimination An admitted insurer shall not, in connection prohibited by the statute, since transgender individuals with health insurance as defined in are the only people for whom the issue of gender subdivision (b) of Insurance Code transition would ever arise. Giving insurers license to section 106, discriminate on the basis of an continue this categorical denial of health care services on insureds or prospective insureds actual or the basis of gender identity would be antithetical to the statute. perceived gender identity, or on the basis

that the insured or prospective insured is a transgender person. The discrimination prohibited by this Section 2561.2 includes any of the following: (a) Denying, cancelling, limiting or refusing to issue or renew an insurance policy on the basis of an insureds or prospective insureds actual or perceived gender identity, or for the reason that the insured or prospective insured is a transgender person; (b) Demanding or requiring a payment or premium that is based in whole or in part on an insureds or prospective insureds actual
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(8) No change. This proposed amendment is unnecessary because it merely parrots the uncodified language of AB 1586. Thus the addition of this language is purely duplicative of what is in the statute and neither implements nor clarifies the statute. Including it in the regulation would potentially result in a violation of the nonduplication standard of the Administrative Procedure Act. (9) No change. This is a general objection to the proposed regulations not directed to any particular provision of the proposed regulations. The Department does not interpret the present comments as a retraction of the commenters earlier comments.

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Synopsis or Verbatim Text of Comment or perceived gender identity, or for the reason that the insured or prospective insured is a transgender person; (c) Designating an insureds or prospective insureds actual or perceived gender identity, or the fact that an insured or prospective insured is a transgender person, as a preexisting condition for which coverage will be denied or limited; or
(6)

Response

(d) Denying or limiting coverage, or denying a claim, for the following services including but not limited to the following, due to an insureds actual or perceived gender identity or for the reason that the insured is a transgender person:
(7)

(1) Health care services for those who are in the process of undergoing or who have completed related to gender transition if coverage is available for those comparable health care services under the policy when the services such comparable health care services are covered for those who are not undergoing or have not undergone not related to gender transition, including but not limited to hormone therapy, hysterectomy, mastectomy, breast reconstruction, surgical treatment for gynomastia, reconstructive surgery for genital injuries or abnormalities, and vocal training provided those services are considered medically necessary unrelated
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Synopsis or Verbatim Text of Comment to gender transition; or (2) Any health care services that are ordinarily or exclusively available to individuals of one sex when the denial or limitation is due only to the fact that the insured is enrolled as belonging to the other sex or has undergone, or is in the process of undergoing, gender transition.
(8)

Response

(e) For purposes of this regulation, this section is not intended to mandate that insurers must provide coverage for any particular benefit, nor is it intended to prohibit sound underwriting practices or criteria based on objective, valid, and upto-date statistical and actuarial data. Rather, the purpose of this section is to prohibit health insurers from denying an individual a policy, or coverage for a benefit included in the policy, based on the person's sex, as defined.
(9) We believe that if the Departments intent is not to

impose a new benefit mandate for transgender services but merely to provide parity to the transgender community as it relates to Californias non-discrimination laws, then this language meets that objective. However, should the Department choose to move forward with the language as proposed in the Revised Regulations provided to us on December 30th the concerns related to health insurance coverage as enumerated in our attached November 29th letter relating to the authority, consistency and necessity of these regulations would remain intact.
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Synopsis or Verbatim Text of Comment Thank you in advance for your consideration. We appreciate the opportunity to comment on the proposed regulations as revised and remain committed to working with the Department on this issue.

Response

Jamison Green, International Guidelines Manager, Center of Excellence for Transgender Health, UCSF [Written comments (Tab 15, 16)]; Verbatim Transgender Law Center, National Center for Lesbian Rights, Equality California, UCSF Center for LGBT Health & Equity [Written comments (Tab 13)]; Verbatim

With regard to the proposed deletions in section (d) (1) beneath Section 2561.2, I wish to lodge an objection to the removal of the terms breast reconstruction, surgical treatment for gynecomastia, reconstructive surgery for genital injuries or abnormalities. It seems prejudicial to limit the medically necessary treatments for gender transition in this way, which could serve to arbitrarily constrain certain individuals from receiving needed care when similar care is available to non-transgender persons. I refer you to the attached statement from the World Professional Association for Transgender Health.

No change. The list of procedures contained in 2561.2 is merely an illustrative list and, as the language states, is not meant to be exhaustive, exclusive or exclusory of other procedures.

The Transgender Law Center is pleased to offer the followin Thank you. comments on behalf of ourselves, the National Center for Lesbian Rights, Equality California Institute and UCSF Center for LGBT Health & Equity. Our organizations suppor of the changes to proposed California Code of Regulations Section 2561.2. The proposed changes further clarify that the regulations prevent discrimination in health insurance coverage and health insurance claims approval based upon an individuals actual or perceived gender identity as set forth in California Insurance Code section 10140, the Insurance Gender Non-Discrimination Act (AB 1586). The proposed regulations provide a detailed description of the types of discriminatory practices prohibited by AB 1586. The regulations will provide critical guidance about

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Synopsis or Verbatim Text of Comment how to give substance to anti-discrimination protection, including prohibitions on denying, cancelling, limiting, or refusing to issue an insurance policy; demanding or requiring a payment or premium; and denying or limiting coverage or a claim due to an actual or perceived gender identity or the fact that a person is transgender and the care is for gender transition. The proposed regulations also prohibit designating as a pre-existing condition for the purpose of denying or limiting coverage an insuredsinsureds actual or perceived gender identity or transgender status. The changes to the proposed regulations, as noticed on December 30, 2011, further strengthen these necessary protections. The changes to Section 2561.2(d)(1) make clear that an insurer may not deny a transgender person coverage for health care services related to gender transition when similar treatments are available to nontransgender persons. This critical regulation will go a long way in ensuring compliance with AB 1586. We thank you for your ongoing leadership in proposing these regulations, which will improve the health of transgender people throughout California.

Response

John W. Mangan, American Council of Life Insurers [Written comments (Tab 14)]; Verbatim
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The American Council of Life Insurers (ACLI) has reviewed the Departments revisions to the above cited regulations, which we received December 30th, 2011. We appreciate your responsiveness to the concerns we expressed in our letter of November 29, 2011, which was written jointly with the Association of California Life and Health Insurance Companies. I understand that ACLHIC may have further comments regarding the health insurance provisions of the rule. We believe the revised regulations

Thank you.

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Synopsis or Verbatim Text of Comment fully address the ACLIs concerns by clarifying that Section 2561.2.applies only to health insurers as defined in subdivision (b) of Insurance Code Section 106. Thank you for your consideration. If you have any questions, please let us know.

Response

Tom Ammiano, California State Assemblyman [Written comments (Tab 11)]; Verbatim

I am writing to respectfully submit these comments in support of the Department of Insurance proposed amendment to regulation Sections 2561.1 & 2562.1 (to be adopted) regarding gender nondiscrimination in health insurance. I want to formally endorse the proposed amendments slotted for public comment until January 13, 2012 and commend you on your leadership on this important issue. In 2005, Insurance Code Section 10140 was amended by AB 1586 to specify that the term sex, as used in this statute, shall have the same meaning as the term gender as defined in Penal Code Section 422.56, which includes a persons gender identity and gender related appearance or behavior. AB 1586 was a monumental piece of legislation for the transgender and gender nonconforming communities granting numerous protections from discrimination to a very vulnerable population of citizens. Insurance Code Section 10140 prohibits discrimination based on perceived or actual gender identity in the issuance and conditions of insurance. Despite the protections established through AB 1586, transgender and gender nonconforming persons have continued to have claims denied for medically necessary procedures that should have been covered under the terms of their insurance policy based on their actual or perceived

Thank you.

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Synopsis or Verbatim Text of Comment gender identity. Furthermore, some transgender insureds have been denied gender based services, like pap smears and prostate exams, because they identify with a gender that does not typically received these services. Some transgender identified consumers have even been denied insurance coverage based on their gender identity. As currently written, Sections 2561.1 & 2562.2 (to be adopted) further clarify Insurance Code Section10140 by specifying the following forms of discrimination: Denying or cancelling an insurance policy of the basis of gender identity; Using gender identity as a basis for determining premium; Considering gender identity as a preexisting condition; or Denying coverage or claims for health care services to transgender people when coverage is provided to nontransgender people for comparable services. The proposed amendments to Sections 2561.1 & 2562.2 (to be adopted) are technical in nature and provide further clarity for consumers and implementers. Gender discrimination in insurance is causing far too many insureds to receive substandard or in some cases no medical care. The proposed Department of Insurance regulations addressing gender nondiscrimination in health insurance will results in thousands of Californians receiving the health care they need and deserve.

Response

Nadia Babella,
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Thank you for your leadership and consideration. Good morning. My name is Nadia Babella, and it's spelled

Thank you.

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Commenter San Francisco Human Rights Commission [Testimony at hearing]; Verbatim

Elizabeth Gill, ACLU [Testimony at hearing]; Verbatim

Synopsis or Verbatim Text of Comment N-A-D-I-A, B-A-B-E-L-L-A, and I work for the San Francisco Human Rights Commission. The Commission is the City department that's charged with enforcing San Francisco's nondiscrimination ordinances. The mandate of the Commission is to identify ongoing emerging human rights issues affecting the diverse communities in San Francisco. The Commission supports the proposed gender nondiscrimination in health insurance regulations. These regulations make clear that discrimination in accessing health insurance based on gender identity is illegal in the State of California. Ensuring nondiscrimination in health insurance is extremely important because of the negative consequences of discrimination in this context. Transgender people are sometimes denied medically-necessary treatment based on their gender identity. Some are denied screenings to detect lifethreatening illnesses because their policies do not cover certain sex-specific tests and some are flat out denied health insurance policies because of discrimination on the part of insurers. These regulations will address these wrongs by ensuring that insurers are clear as to what gender-identity discrimination is and looks like. These regulations are a great first step in guaranteeing equal access to health insurance to all Californians. As such, the San Francisco Human Rights Commission fully supports the proposed regulations. (1) Good morning. My name is Elizabeth Gill, G-I-L-L, and I am a staff attorney with the LGBT and AIDS Project of the American Civil Liberties Union or ACLU, and I'm speaking here today on behalf of all of the ACLU affiliates in California. As we set forth in our -- in the written comments we submitted last week, the ACLU of California fully supports the proposed regulations specifying forms of gender discrimination that violate

Response

(1) Thank you. (2) No change. The commenters recommended amendment to the regulation would exceed the Commissioners authority under California Insurance Code 10140. An additional term that would broadly and non-specifically require insurers to pay for all medically necessary treatment would go beyond the scope and authority of Insurance Code section 10140. Further, the inclusion of the suggested language would at least

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Synopsis or Verbatim Text of Comment California Insurance Code 10140, and we absolutely applaud the Commission's response to the serious and persistent discrimination that transgender Californians continue to experience from health insurance carriers. Although the Insurance Gender Nondiscrimination Act was passed in 2005, we continue to receive complaints about transgender people being denied insurance coverage simply because they are transgender or being denied treatments offered to non-transgender people. In fact, our ACLU of San Diego received such a complaint just a few months ago. When we have advocated with insurers on behalf of transgender people, the insurers have been confused or refused to recognize that discrimination against transgender people is discrimination based on gender. It's our perception, confirmed by other people testifying here today, that this kind of discrimination is widespread in our state and of course causes great harm to the already extremely vulnerable population of transgender Californians. The Commission's proposed regulations therefore offer important and indeed necessary verifications for insurers as to what California law requires. Finally, although the proposed regulations usefully catalog the types of care insurers cannot deny transgender Californians, (2) the ACLU of California agrees with the National Center for Lesbian Rights that it would be additionally helpful to clarify that insurers cannot discriminate against transgender people in the provision of any care. And by this, the National Center for Lesbian Rights, which hasn't had a chance to testify yet but is going to, is just going to propose a small change to the proposed regulations, just simply clarifying that -- clarifying what we know the law already says, which is just that insurers can't discriminate against transgender people in the provision of any care.

Response
strongly imply that all the other services listed or referred to earlier in Subdivision (d) of Section 2561.2 of the proposed regulations are, in fact, medically necessary in all cases. However, the proposed regulations take no position with respect to the question of whether any particular service is or is not medically necessary.

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James Briggs, Lavender Coalition of SEIU, First Congregational Church of Riverside [Testimony at hearing]; Verbatim

Synopsis or Verbatim Text of Comment And I believe that they have -- the National Center for Lesbian Rights has written up this proposed addition and is going to present it today. Again, thank you so much for your leadership on this critical civil rights issue and for looking to ensure the equal treatment under the law for transgender Californians. Thank you. Good morning. We've already submitted a written statement from one of our mission board members, Genevieve Scarborough. What I would like to add to that, with these regulations, which you may not be aware of, the consequence of not having this, many transgender people face, as we know, discrimination. Oh, am I close enough? I'm sorry But without these regulations, a lot of them are forced to basically, where we used to have back-alley abortions when abortion was illegal, these people are now forced to, because of cost, whether it's -- you know, they're either forced to go to substandard treatment, self-induced treatment such as self-induced hormone replacement therapy obtained on the black market, inferior or nonexistent doctors or inferior people practicing medicine as doctors, basically quacks. So there is a wide range of health differences, and these things have resulted in many people being maimed for life and even death. I can personally attest to someone having had substandard treatment that actually died from it at the age of 24.But what I would like also to reiterate is the fact that these people -- you know, they're being denied coverage, which is -- we see it in our church, which is very supportive of this motion. We see it in the mental health. We see it in the delay of treatment. We see it in the physical anguish, and we see it in members even contemplating suicide. We urge the passage of this. We feel that this is something, as has been previously stated, is an innate and human physiology. We feel that these people, because of this discrimination,

Response

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Mario Guerrero, Equality California [Testimony at hearing]; Verbatim

Synopsis or Verbatim Text of Comment have a high incidence of suicide, drug abuse, other damaging physical and psychological effects. So we would like we would also like to support the inclusion of the amendment for the transgender medical -- inclusion of medically-necessary procedures. So that's pretty much about what I need to say. We are also going to -- like I said, we have submitted this. We will submit it again from our mission board from our church. And as a Lavender Committee member with SEIU, we also applaud this because, as part of our statement, injustice to one is injustice to all in our goal of universal -- the word is justice for all. And we believe that this falls under the category of medical injustice, so thank you very much. Thank you. Good morning. My name is Mario Guerrero, I'm Government Affairs Director for Equality California. And on behalf of the board and staff of Equality California, I am here to support the proposed draft regulations regarding nondiscrimination in health insurance affecting the transgender community. Equality California is the largest statewide lesbian, gay, ,bisexual and transgender civil rights advocacy organization in California. Over the last -over the past decade, Equality California has passed more than 75 pieces of legislation and continues to advance equality through legislative advocacy, electoral work, public education, and community empowerment. We applaud Insurance Commissioner Jones and his staff in working to promulgate regulations to implement AB 1586, authored by then Assembly Member Paul Koretz of West Hollywood in 2005 and sponsored by Equality California. This bill was known as the Insurance Nondiscrimination Act. Earlier this year, Equality California, The National Center for Lesbian Rights, and the Transgender Law Center and additional folks provided the Department of Insurance five cases of denied coverage claims to

Response

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Denise Taylor, MD, [Written Comments (Tab 63)]; Verbatim

Synopsis or Verbatim Text of Comment demonstrate that, despite existing anti-discrimination statutes, many people in California continued to have experienced discrimination in health -- by health insurance companies on the basis of gender, gender identity and gender expression, particularly members of the transgender community. Simply because of their transgender status, many people are denied the ability to purchase insurance or are denied coverage for medically-necessary procedures under contracts they are able to secure. This discrimination leads to many negative health consequences, as has been shared by other folks that have given testimony. Current law is clear that an insurer shall not discriminate on the basis of actual or perceived gender identity. Because many insurers are failing to comply with this mandate in law today, Equality California strongly believes that regulations are necessary to ensure that insurers understand and apply the law equally and without discrimination. In closing, we support the AB 1586 regulations. We support the additional language that will be described in further denial by NCLR, and we thank you for your leadership on this important civil rights issue. I have reviewed the above regulation and I am encouraged Thank you. by its findings. As a specialist in HIV/AIDS medicine and also in Transgender Health Care, I am well aware of the medical needs of transgender individuals. However, most health insurance plans currently deny essential health care for this group of people. When any element of health care is excluded by a third party reimbursement plan, it interferes with my ability to provide the proper care to my patients. As a physician, I am responsible for each patients overall health care. Transgender people need and deserve the full spectrum of care that non-transgender people enjoy. As a

Response

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Anne Eowan, Vice President, Government Affairs, Association of California Life and Health Insurance Companies [Written comments (Tab 64)]; Verbatim

Synopsis or Verbatim Text of Comment society we understand that access to excellent medical treatment benefits not only the individual receiving it but also society as a whole. Economic health is tied to physical health. It is my hope that this economic impact statement will finally prove that providing health care to all individuals, including transgender people, is a financially and economically sound practice. The Association of California Life and Health Insurance Companies (ACLHIC) has received the Notice of Addition to the Rulemaking File for the above cited regulations, and wishes to comment on the Economic Impact Assessment (EIA).

Response

(1) The regulations do not impose a requirement

amounting to a new benefit mandate. In the EIA, the Department states that the proposed regulation requires equality of treatment. If a medically necessary treatment is not available to other insureds, the insurer cannot be required under the proposed regulations to provide coverage for that treatment to transgender individuals. (1) Since the EIA appears to provide a economic impact Accordingly, the proposed regulation does not impose a analysis of providing a new benefit for transgender health new benefit. care services, we would reiterate the comments we For example, one treatment that is used solely to provided in our comment letters of November 29, 2011, treat gender identity disorder or gender dysphoria is called a metoidioplasty. The Department is not aware of and January 13, 2012 (see attached), wherein we this procedure being available and provided for purposes expressed our view that the Commissioner lacks the authority to interpret Section 10140 in such a manner as to other than gender transition. Because this treatment is impose a new mandated benefit to cover specified services not provided to any insured, no insurer would be obligated to cover this treatment for transgender insureds for a transgender individual diagnosed with GID or GD, under the proposed regulations. regardless of medical necessity. It simply does not follow that, just because the EIA relies on data from organizations that did offer a new (2) With that ultimate objection in mind, we would also benefit for transgender health care services, the note that the examples cited in the EIA regarding claims proposed regulations must also be requiring insurers to provide a new benefit. Under the proposed regulations, if costs and premium history are very limited in their scope a given health care service is not covered under a policy, and thus cannot lead to the conclusion that there will be insurers will not be required to cover that service for negligible premium impacts. This is particularly true because the examples cited are large group policies issued transgender individuals for any reason. Rather, the proposed regulations require only that insurers do not to government or Fortune 500 employee benefit plans. As discriminate by denying coverage for a service that is such, any premium impacts would be spread across a larger already covered under a particular policy to a transgender group of individuals, softening the claims impacts. insured, solely for the reason that the insured is a (3) Further, the examples cited included benefit plans that transgender individual. Because the proposed regulation

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Synopsis or Verbatim Text of Comment had limitations on the transgender benefit which would obviously lessen the impact of the benefit on premiums. Limitations on the benefit do not appear to be contemplated in the regulations, but rather parity with coverage of medically necessary services unrelated to gender transition services and treatment. (4) More importantly, there is no economic impact analysis of the impact of the regulations on small group or individual/family coverage. It would be expected that individuals wishing to obtain transgender-specific services would choose an individual health insurance policy on that basis, creating a much greater impact on premiums. Further, Mr. Edward Wu there are far fewer lives in small group and individual/family coverage for the costs to be spread across. For these reasons, we must respectfully disagree that there would be negligible economic impacts of such an interpretation of existing law as provided in the EIA. We regret that our concerns as stated previously in our comment letters, regarding the lack of clarity, authority and necessity in these regulations remain. Thank you for considering our comments on these proposed regulations. Please feel free to contact me if you have any questions or need any additional information regarding our position.

Response
is not yet effective, and gender discrimination in health insurance therefore remains virtually universal, the Department had to use as underlying data for the EIA the best available proxy for the situation that will exist once the regulations do become effective: data from organizations that currently offer a transgender health care services benefit. It was necessary, appropriate and responsible to use data from these sources in assessing the economic impact of the proposed regulations, which stop short of requiring a new benefit for transgender health care services but nonetheless will likely have a similar effect on costs to insurers. (2) ACLHIC is correct that the examples cited in the EIA are from large group policies issued to government or Fortune 500 employees. As noted in the EIA, there are limited claim cost data publically available due to extremely low utilization coupled with concern that releasing such data could be traced back to individuals and violate health privacy laws. In addition, to our knowledge, there are no insurers currently operating in the individual or small group market in California that provide health insurance plans without exclusions that are discriminatory. Therefore, EIA was performed drawing upon the existing large group market data. Despite the fact that examples cited are from large group policies, the Department disagrees with ACLHICs assertion that the cited examples cannot lead to conclusions stated in the EIA. Based on the cited studies and examples, the prevalence of the transgender population is extremely low, and the subpopulation of transgender individuals that are insured is even smaller. Furthermore, like any other rare condition, treatment for gender identity disorder and gender dysphoria is unique to each individual. This results in an even smaller pool of individuals for whom medical intervention would be warranted. This low prevalence rate applies to the whole California population, same across large group, small

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group or individual market segments. Insurers are expected to spread the costs (which are insignificant because of the low prevalence rate, and relatively finite size of the claims) across all business in the market segments in which they operate. Insurers having small market share in any market segment will face higher claim cost volatility, but this is no different from the larger volatility that small companies will always face irrespective of whether they are required to provide equality of coverage to transgender insureds or not. (3) ALCHIC has stated that the limitation on the benefit plans in the cited examples may have lessened the impact of the additional benefits on premium. The Department believes that the limitation on the benefits in the plans cited as examples in the EIA does not, in any discernible way, lessen the applicability of the analysis in the EIA to the effect that will be produced by the proposed regulations. It is correct that having limitations on the benefit plans will lessen the impact of the benefit on premium. However, based on the cited examples in the EIA, the Department has shown that the claim costs PMPM attributed to the elimination of transgender discrimination have been very low. As cited in the EIA, for the University of California, the largest claim per insured transgender person over the 6.5 years was $86,800. And there were only three individuals whose claim payments for transgender surgery met or exceeded their lifetime limit of $75,000. Because the nature of these claims is not catastrophic, the Department believes that the proposed regulation, which provides treatment to transgender individuals at parity, will have insignificant impact on the premium. In addition, the EIA on page 9 states additional factors regarding the nature of the claims incurred by transgender individuals: Transgender insureds may have already undergone treatment; Surgical treatment for GID is usually once-in-a-

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lifetime event, and many costs are spread over many years, and do not occur in a single year; and Not all transgender people have a diagnosis of GID and, therefore, not every transgender will need or want the proposed treatments. (4) When the proposed regulations become effective, all insurers that are operating in the individual and small group markets and that are regulated by CDI will need to comply with the regulations. ACLHICs concern may be that when this regulation becomes effective, some transgender individuals will switch their health coverage from DMHC-regulated products, which will not be subject to the regulations, to CDI-regulated products, which will be subject to the regulations, thus creating a much greater impact on premiums. In its EIA, the Department estimates there are a maximum of about 5,200 transgender insureds in California that may be impacted by the proposed regulation. This includes insureds in the large group, as well as the small group and individual, markets. Assuming the transgender population is distributed uniformly across all market segments, the maximum number of transgender insureds covered under individual and small group policies would be about 17% of 5,200, or approximately 910. (Based on information cited in the EIA, not quite one fifth of the insured population, or roughly 5.2 million of the 30 million insured Californians, is currently covered in the privately-funded individual or small group market.) Some of these individuals have policies that are currently regulated by DMHC. Relying on information cited in the EIA, Department actuaries estimate the prevalence of transgender policyholders in the individual and small group markets for CDI-regulated business to be about 0.015%. Under the worst case scenario, in which we assume that all the transgender individuals currently covered under DMHC-regulated products would switch to CDI-regulated products, the

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Synopsis or Verbatim Text of Comment

Response
prevalence of the transgender population among the individual and small group market who are covered by CDI-regulated products would rise to 0.03% at most, or three one-hundredths of one percent. However, it is highly unlikely that we will see significant migration following the implementation of the proposed regulation. Several factors would tend to hinder a migration from DMHC- to CDI regulated products. For example, in the individual market, switching policies would require being able to satisfy applicable underwriting requirements, which many individuals could not do, for reasons unrelated to gender identity. Additionally, insureds may be deterred from switching by premium cost considerations. Finally, a certain number of transgender individuals currently covered under DMHC-regulated products may be content with the care they receive under those products and accordingly would not voluntarily switch. This is true even among that subset of transgender insureds consisting of individuals requiring gender transition services. (There is anecdotal evidence that Kaiser, for instance, whose products are regulated by DMHC, has in fact covered gender transition services (see Tab 5).) We therefore find that the conclusion arrived at in the EIA remains sound. That is to say, under even the worst case scenario any impact of the proposed regulation on premiums for CDI-regulated policies sold in individual and small group market would be immaterial. As stated in the EIA, the Department does believe that there may be a possible spike in demand in the first few years after the adoption of the proposed regulation due to the possible existence of some current unmet demand, which may lead to a discernible increase in claim costs in the near-term following the adoption of the proposed regulation. We believe, however, that the very small size of the impacted population will make the magnitude of any such increases insignificant and immaterial.

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