Last year, a federal court in Washington State ruled that Premera Blue Cross unlawfully discriminated when it refused to cover elective double mastectomies for two young girls. The decision read like a harsh warning to every employer: exclude gender-transition procedures for children from your health plan and risk an Affordable Care Act discrimination claim. But the story doesn’t end there.
In July 2026, the United States filed a brief urging the Ninth Circuit to reject that court’s misguided reasoning.
In a 39-page brief supporting Premera’s appeal, the Justice Department’s Civil Rights Division argues that declining to fund these elective sex-denying surgeries for minors is not sex discrimination. “Far from being discrimination on the basis of sex,” the brief states, “this sensible policy is rooted in biological reality, developmental psychology, and medical diagnosis.” The brief anchors its argument in the Supreme Court’s 2025 decision in United States v. Skrmetti, arguing that “regulating medical procedures on the basis of diagnosis does not automatically amount to discrimination on the basis of sex.”
Premera covers a mastectomy for a teenage boy with gynecomastia and for a girl with breast cancer but declines to cover the same surgery when it is performed on healthy adolescents—boys and girls alike. The distinction, the brief argues, is the diagnosis, not the patient’s sex. It further contends that every federal appeals court to address the question since Skrmetti has rejected the lower court’s approach, including the Ninth Circuit, in Pritchard v. Blue Cross Blue Shield of Illinois, and the Fourth Circuit, which the brief says rejected the very precedent upon which the district court had relied.
At the heart of the argument sits a single contested phrase: “medically necessary.” Health plans cover what is medically necessary and decline what is not. Yet the claim that surgically transitioning a child is “medically necessary” does not rest on science but rather on an ideology and reliance on the discredited standards issued by the World Professional Association for Transgender Health (WPATH). The Federal Trade Commission and several states are now suing WPATH, alleging that it stripped age limits for mastectomy and genital surgery from its “Standards of Care” without evidentiary basis and labeled virtually every pediatric “transition” service “medically necessary.” The Justice Department presses the same point, citing the U.K.’s Cass Review and a November 2025 Health and Human Services gender dysphoria report that found the quality of the evidence “very low.” The Justice Department further argues that such surgeries are “never medically necessary for either adults or adolescents.”
In corporate America, including such coverage for minors is unfortunately a standard practice.
Research conducted by 1792 Exchange documents more than 550 companies whose health plans still cover sex-denying procedures for minor dependents. Their exposure to legal and reputational risk is growing, however. Detransitioner malpractice litigation is mounting, including the first such jury verdict: a $2 million award this year. Congress’s proposed TRUTH in Coverage Act would require any plan that covers these procedures also to cover the complications and adverse effects that accompany them. And a company shown to have paid for these interventions on an employee’s child invites its own reputational day of reckoning.
The prudent course is not complicated, and some of America’s largest employers have already taken it. Walmart and Charles Schwab have excluded “gender-transition” surgeries and drugs for minors from their health plans. They made the right decision for their shareholders and for the children on their plans. The Justice Department’s brief now defends the same line in court: a policy that declines these interventions for all minors, grounded in diagnosis and age, rather than a distinction between transgender and other patients, is, in the government’s argument, not discrimination. We might simply call it “the right thing to do.”
Every company still funding these procedures should ask its plan administrator one question: On whose authority are we calling this “medically necessary?” If the answer traces back to WPATH, the company is carrying legal and reputational risk on a foundation that the federal government is now working to dismantle. Companies getting back to the business of serving all their employees, and protecting the children on their plans, are the ones acting wisely. We call on the rest to follow Walmart and Schwab.
Douglas H. Napier is the Executive Chairman and CEO of 1792 Exchange.
Originally published in City Journal