Research: Trans Care Funding Could Save Medicare Millions

Research: Trans Care Funding Could Save Medicare Millions

Transgender and gender-diverse ("trans") people have worse mental health compared to the general population . As a result, they're more likely to use mental health services, such as psychologists and counsellors, and treatments such as antidepressants and anxiety medication .

While there are many contributing factors , including stigma, we know gender dysphoria can play a major role. Gender dysphoria refers to the distress or discomfort some trans people feel about their gender, body, or how others perceive their gender.

Gender-affirming medical care - which may involve hormone therapy or surgery - helps align trans people's bodies with their gender identity. And evidence shows it can drastically improve trans people's mental health .

But until now, we haven't had research that tracks whether this means they actually use mental health services and scripts less.

Our two new studies - one on hormone therapy and one on surgeries - looked at what happens before and after people access gender-affirming medical care.

For the first time, we've shown that gender-affirming care dramatically reduces how much people access mental health care - saving Medicare millions.

Trans people may seek out different types and degrees of gender-affirming care.

This can include:

Not every trans person wants gender-affirming care, but most do.
National survey data suggests around 72% want to access it at some point in their lives.

One 2021 study surveyed 928 trans people, including trans men, trans women and non-binary people. It found 89% of those assigned female at birth had or wanted to have chest surgery, and 82% of those assigned male at birth had or wanted to have genital reconfiguration surgery.

Research consistently finds gender-affirming procedures have very low regret rates (less than 1%) compared to other surgeries, such as knee reconstruction (10%) and cancer procedures (24%).

Gender-affirming surgeries aren't consistently subsidised under Medicare, meaning people who pay for this medical care themselves can incur between $20,000 and $100,000 out-of-pocket.

But the government is considering adding these surgeries to Medicare . This would mean a rebate for certain procedures, although the patient would cover the gap, which could still be many thousands of dollars.

Hormone therapy is listed on the Pharmaceutical Benefits Scheme, meaning patients pay a small co-payment to fill their scripts. Costs vary significantly depending on individuals' dosages and goals, but the government spends between $79-$278 per person each year.

However, some jurisdictions have recently blocked access to this kind of medical care. Last year, the Northern Territory and Queensland banned hormone therapy for trans people aged under 18, including testosterone, estrogen and puberty blockers.

We know gender-affirming care improves trans people's quality of life and reduces psychological distress , dysphoria and suicidal thoughts .

So we wanted to see if this would translate to a drop in trans people using mental health care.

We used de-identified Medicare records over a decade (2012-2024) to track how using mental health services and scripts changed for:

We also adjusted the data for "confounding factors" - differences which could distort results - such as age and socioeconomic background.

Our data showed that before starting hormone therapy or undergoing surgery, trans people used between 1.6 and 3.6 mental health services (such as psychologist visits or GP mental health plans) each year.

In comparison, the average Australian uses one service every two years . So trans people who sought these types of services used them 3.2-7 times more than average.

But five years after starting hormone therapy, trans people in our data used between 0.3 and 2.6 fewer health services.

If we translate this into reduced psychologist visits using the standard $100 rebate, it means each year, the government spent $30-260 less per person after they started hormones.

In our study on surgery, we were able to look at exact Medicare costs for services and scripts.

When someone had chest surgery, we found the government spent $1,769 less on their mental health care (on average) over the following five years.

For genital surgery, the average mental health care saving per person was $3,416 over the following five years.

If gender-affirming surgeries are added to Medicare, the average proposed rebates would be $1,328 for chest surgery and $1,195 for genital reconfiguration surgery.

Our findings suggest these one-off costs would be be eclipsed by the reduced government spending on mental health care within 4-5 years.

It's difficult to know how many Australians are actually trans, as we don't yet have census data on this.

And we don't know exactly how many people would access surgeries if they were added to Medicare. But the research mentioned above from 2021 suggests between eight and nine in every ten trans people want or have already had top or bottom surgery.

So we applied those rates to estimate demand for surgery in the sample we observed who were currently on hormone therapy, given people usually take hormones before surgery . Still, this is a conservative estimate .

Our calculations show, if the government paid $1,328 each for 89% of 11,883 trans people to receive top surgery, the total cost would be $14 million. Once we subtract the mental health savings over five years for this group ($18.7 million) this means Medicare would spend $4.6 million less over five years.

The cost for 82% of 20,358 trans people to get bottom surgery (with a $1,195 rebate per person) would be $19.9 million. Once we subtract the mental health savings over five years for this group ($57 million) Medicare would save about $37 million over five years.

This would lead to a total of almost $42 million in savings within five years.

However given the significant unmet need for gender-affirming care this number is likely to be much higher.

Hormone therapy is similarly cost effective . In some cases it offsets the money spent in mental health care and in others it leads to savings.

When trans people have access to gender-affirming medical care, it reduces their distress and vastly improves their quality of life. Now, our findings show there are economic benefits too.

Karinna Saxby has previously received funding from the Department of Health and Aged Care and currently receives funding from the University of Melbourne McKenzie Fellowship. Karinna is a co-founder and committee member of LGBTQ Economists and Allies in the Asia Pacific (LEAP).

Brendan Nolan has received research funding from NHMRC, University of Melbourne, Endocrine Society of Australia, Royal Australasian College of Physicians Foundation and Viertel Charitable Foundation. He is currently a member of the Endocrine Society (US), Endocrine Society of Australia, World Professional Association for Transgender Health and Australian Professional Association for Trans Health.

Clue Coman receives Research Training Program (RTP) scholarship funding through the University of New South Wales.

Dennis Petrie receives funding from Australian Research Council (ARC), National Health and Medical Research Council (NHMRC), Department of Health, Disability and Ageing, VicHealth, Medical Research Future Fund and the National Disability Insurance Agency.

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