The state Department of Justice has asked the Group Insurance Board to reconsider its July 12 decision to cover the cost of gender reassignment surgery for state workers beginning next year.

Andy Cook, deputy attorney general, said in a memo to the board last week that the board’s decision was based on “unlawful” federal rules stemming from the Affordable Care Act. The rules “improperly reinterpret” Title IX, which covers discrimination on the basis of sex, to apply to gender identity, Cook said.

Attorneys for the state Department of Employee Trust Funds had previously advised the insurance board to start covering gender reassignment services, saying it was required by the new federal rules.

In response to Cook’s memo, ETF attorneys said not covering the services could jeopardize the state’s ability to contract with health insurance companies and result in the loss of about $36 million per year in Medicare subsidies.

“ETF recommended those changes after careful review of the (federal) rule,” David Nispel and Diana Felsmann wrote.

The debate comes after Shannon Andrews, a transgender researcher at the UW School of Medicine and Public Health, filed a complaint July 26 against the insurance board, the medical school and an insurance company, saying she was unfairly denied coverage of gender reassignment surgery.

The board has received two such complaints, Nispel and Felsmann said.

The complaint by Andrews, filed by the ACLU of Wisconsin, came two weeks after the insurance board decided to cover the services beginning Jan. 1. Andrews seeks reimbursement of $21,000 she paid to have surgery in October to transition from male to female.

She said she had no idea the policy change was coming, and she needed to have the surgery last year to prevent physical and mental health problems.

Cook said the Affordable Care Act incorporates Title IX’s ban against discrimination based on sex, but that is different from gender identify. “Nowhere in the Congressional debates over Title IX does the phrase ‘gender identity’ or ‘transgender’ appear,” Cook said.

By ending the state’s previous exclusion of coverage for gender reassignment services, ETF is mandating that all such services be covered even if they’re not medically necessary, Cook said.

Nispel and Felsmann disagreed, saying plans can still deny services that are not medically necessary.

The memos were first reported Thursday by Wisconsin Health News.

The insurance board did not take any action on the changes at a meeting Tuesday. ETF is proceeding with the decision made in July, spokesman Mark Lamkins said.

Capital W: Plug in to Wisconsin politics

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