The Cost of Transgender Health Benefits

The Cost of Transgender Health Benefits

The Cost of Transgender Health Benefits

Mary Ann Horton, Ph.D.

Transgender at Work

DRAFT of March 30, 2006

ABSTRACT

This paper estimates cost of Transgender Health Benefits (THBs) for US residents. It reports on a 2001 survey of surgeons who offer Sex Reassignment Surgery (SRS) procedures. The survey measured the average cost for Male to Female (MTF) SRS and for Female to Male (FTM) primary surgery (top surgery) in 2001. Nonsurgical costs are calculated empirically, with margins of error. Total THB cost is compared to the number of eligible US residents in the 2000 US Census to determine cost per insured.

The survey found that the average cost for MTF SRS in 2001 was about $10,400 and for FTM primary surgery (top surgery) was about $8,500. FTM bottom surgical costs averaged about $9,500/patient. Total surgical cost, compared to the number of US residents in the 2000 US Census, is 6¢ per insured per year.

Adding typical THB nonsurgical costs for mental health (2¢,) Hormones (19¢,) and doctors office visits (12¢,) the total estimated annual cost per insured would be 39¢. The total cost per insured might be as low as 16¢ or as high as $3.64. These costs represent the total cost, including employer and employee shares, and include any costs already being covered by the employer. Increased costs to employers would be less, probably no more than 11¢.

Keywords

Transgender Health Benefits. THB, THB Cost, Sex Reassignment Surgery Cost, Hormone Cost, Domestic Partner Benefits Cost, Transgender Insurance Cost, Transsexual Insurance Cost.

Submitted for publication to the International Journal of Transgenderism,

Copyright © 2006 by Mary Ann Horton. All rights reserved. Redistribution by permission only.1. Introduction

Many Health Care benefits policies contain an exclusion stating that any benefits related to sex reassignment surgery[i] are excluded from the coverage. Initially, this ban was justified by considering the procedures "Experimental" or "Cosmetic." After over 20 years of routine health care for transsexual people, benefits are now often excluded as "Too expensive." Costs as high as US $75,000 per person are cited as justification for exclusion. Transgender activists counter that so few people go through the process that the average cost per insured is very low.

What would it really cost to provide full or partial medical benefits to transsexual workers? How many people do go through this process each year? This study addresses these questions, by measuring the annual number of surgeries (run rate) on US residents, measuring the cost of these surgeries, estimating the nonsurgical costs, and then developing a mathematical model of total Transgender Health Benefit (THB) cost.

1.1. Previous Work

The costs charged by surgeons are well known. Prices of well known surgeons are posted on their web sites, or on the web sites of transgender resources. In 2001, they ranged from $4,500 to $26,000 for MTF surgeries, and from $4,000 to $60,000[ii] for FTM surgeries.

The cost of THB coverage will depend on both the prevalence and the average cost per patient. Estimates of cost have primarily come from consultants and the media. With little actuarial data to base estimates on, estimates have been markedly conservative.

1.2. Cost Experience with Employers

Some employers have decided to include full THB coverage for their employees, including surgery. A few years of experience are available to see what their costs were.

Lucent

Lucent provided coverage beginning in 2000. Originally with about 150,000 employees, Lucent has downsized and spun off most of its work force, and has about 33,000 employees as of 12/31/2003. There has been much publicity of Lucent's benefits in the transgender community. During this interval, Lucent paid for one MTF surgery in 2000 (Lucent's 80% share was "just over $11,000") and one MTF surgery in 2003 (Lucent's share was $8290.) A third Lucent employee had MTF SRS in 2002 and chose to fund the surgery herself rather than deal with insurance process.

Avaya

Avaya is a 2001 Lucent spin-off with about 40,000 employees. There have been no claims for surgery during the period through 2003.

San Francisco

The City of San Francisco published a paper (Human Rights Commission, 1997) stating the case for THBs for City employees. They estimated costs for surgery from $7,500 to $36,000 for MTF transsexuals, and $4,000 to $75,000 for the combination of FTM surgeries, including surgeon, anesthesia, and hospitalization fees. Hormone therapy was estimated to average $250/year for either sex. They stated that of 27,000 city employees, 12 were known to be transsexual.

In 2001, San Francisco added restricted THBs for city employees. At the time, they estimated that 17 of their 37,000 employees were transgender, and that 35 employees would use the benefit in its first year. (No explanation is given for this discrepancy.) (Dozetos, 2001.) Employees had to have 1 year of city employment to be eligible, and had a $50,000 lifetime benefit cap. They set the additional cost at $1.70/month/employee, or about $750,000 per year total cost to the city. Because of the culture of acceptance in the San Francisco area, there is thought to be a higher density of transgendered residents in the city than in other large cities in the United States. If ever a claim could be made that an employer would be a magnet for transsexuals seeking surgery, San Francisco would be expected to see the effect.

In 2004 and 2005, actual claim data was made available. In 4 years, there were 11 claims for surgery, totaling $183,000, or $46,000/year, not including costs for therapy or hormones. Since the city covers 60,000 insured, the surgical cost/insured is $.72/year. The city has lowered its charge to $10.20/year/employee, ($.85/month,) raised its lifetime cap to $75,000, removed the 1 year employment requirement, and offered the benefit on every health plan offered to its 30,000 employees. One can calculate that $.85 per month for 30,000 employees adds up to about $300,000 per year to fund the benefits. The payout was anticipated to increase from the initial experience, due to the reduced waiting period and increased cap. (Green, 2005.) In actual experience, the 4th year payout decreased ($50,000/year for 7 patients in the first 3 years, $43,000 for 4 patients in year 4.)

2. Methodology

The goal of this study was to create a credible estimate of the total cost of THBs per insured. Surgical costs were measured by counting the total number of surgeries in one year and calculating the average cost per surgery. Nonsurgical costs were estimated by assuming standard treatments and standard costs for these treatments, then multiplying by the estimated number of patients undergoing each treatment. Total costs were summed, and then divided by the number of eligible US residents.

Persons desiring irreversible surgical procedures who value the quality of the result will usually go to a surgeon who has performed the procedure many times previously. It is known within the transgender community that the vast majority of transsexuals seeking surgery go to one of a relatively short list of surgeons for their final surgery. Most surgeons who routinely practice this type of surgery belong to HBIGDA. In the fall of 2001, there were 43 individual surgeons and 12 clinics that belonged to HBIGDA. Of these, by reputation, the vast majority of US transsexuals went to one of 15 surgeons. (Eight of these surgeons are in the US, and seven of them are not.) This study refers to these 15 surgeons as major surgeons.[iii]

2.1 Survey

The author sent a survey in 2002 to all surgeons and clinics who were listed as members in HBIGDA. This survey inquired about all surgeries performed by the specific surgeon in the calendar year 2001. Questions were designed to support calculation of the run rate (total number of procedures performed annually), and the average cost per patient. The percentage of patients who are US residents was requested. The data was adjusted to apply only to US residents, and compared to available US census data. The percentage of the US population who undergo SRS each year (prevalence of SRS) was then calculated.

SRS is a once-in-a-lifetime event for any given transsexual patient. It was important to count each patient exactly once, in order to accurately estimate the run rate. To this end, the concept of a primary surgery is defined. This is a surgery that can occur only once in any given patient, no matter how many follow-ups, corrections, reversals, or cosmetic surgeries are done. In addition, the primary surgery must be a procedure that is required, that must be performed for SRS to be considered complete.

For MTF patients, the primary surgery is defined to be the penectomy (removal of the penis.) This procedure is always accompanied by a vaginaplasty, but in case of complications, a second vaginaplasty may be indicated. Only one penectomy is possible for any one patient. The cost of the MTF primary surgery measured was the cost of penectomy, orchidectomy, vaginaplasty, and labiaplasty combined, and included surgical, hospital, and anesthesiologist fees.

For FTM patients, the primary surgery is defined to be the bilateral mastectomy (top surgery.) The various bottom surgeries (hysterectomy, metoidioplasty, phalloplasty) are not always indicated, but almost every FTM patient will undergo a single top surgery. The cost of the FTM primary surgery measured was the cost of the mastectomy and chest reconstruction, and included surgical, hospital, and anesthesiologist fees.

Patient counting was based only on primary surgeries. Patient cost, however, was based on total cost of all surgeries, including follow-ups to treat complications. Questions 2 and 5, below, requested total cost of all surgeries.

The specific questions are shown in Appendix A. They may be summarized as follows:

1. How many MTF primary surgeries did you do in 2001?
2. What was the total cost of all the surgeries?
3. What fraction of the surgeries was done on US residents?
4. How many FTM primary surgeries did you do in 2001?
5. What was the total cost of all the surgeries?
6. What fraction of the surgeries was done on US residents?

After a two-month interval, follow-up letters were sent to the major surgeons who had not yet responded. All major surgeons who had not responded were again contacted, until it was clear there would be no further responses.

After tabulating the data, estimates for the major surgeons who did not respond were made, based on other available information. For example, many surgeons' prices are well known or posted on their web sites. A former patient who interacted with the staff for the 1-2 week period during their surgery estimated run rates. In one case, missing data was discovered in a published book.

Combining the surgical data with US Census data (Census, 2000,) it is possible to estimate the prevalence in the US population who had SRS in the year 2001, and the average surgical cost for primary procedures. Female-to-Male "bottom surgeries" (hysterectomy, metoidioplasty, phalloplasty) were also estimated. This result, presented in (Horton, 2006,) is that the prevalence of SRS per year among US residents is about 1:240,000 (1:190:000 MTF and 1:330,000 FTM.)

2.1 Cost Estimation

Building upon the survey data and prevalence calculation in (Horton, 2006), average surgical costs were calculated. Female-to-Male bottom surgery costs were estimated using the same approach. The average prices for each procedure were calculated from public and survey data. By interviewing a subject matter expert, estimates were made of the fraction of FTMs who undergo each procedure. The average cost of each procedure was applied to the appropriate fraction of the total FTM population.

Additional (nonsurgical) costs can be estimated by applying standard rates. For example, the drug costs for hormone therapy, and the cost for office visits to therapists and physicians were estimated. Costs and prevalence for FTM bottom surgeries are more difficult to estimate, but ranges can be used to place bounds around the total costs.

Total surgical costs can then be estimated by adding (separately for MTF and FTM populations)

1. Total primary surgical costs (including follow-ups)
2. Total additional surgical costs (FTM bottom surgery)

These costs can be divided by the run rates for MTF and FTM primary surgeries, resulting in average cost per patient.

Nonsurgical costs were estimated for three major categories of cost, as follows.

1. Total mental health costs
2. Total hormone costs
3. Total doctor’s office visit costs in support of hormones

Nonsurgical per-patient costs were determined in 2002 using known regimens and costs. Since many transsexuals have therapy or hormones without proceeding to surgery, the run rates for each procedure will be different. Nonsurgical run rates could be estimated in proportion to the surgical run rates. The run rates and per-patient costs for each type of treatment (mental health therapy, hormones, doctor’s office visits in support of hormones, surgery) can be combined to estimate the total THB cost for US residents. The costs can be divided by the number of eligible US residents to determine the cost per insured.

The range of error in this type of study is difficult to measure. The approach used here is to place boundaries around each estimate, using the most optimistic and most pessimistic possible assumptions. Ranges can then be calculated using these boundaries, to establish a range from the minimum cost scenario to the maximum cost scenario. Boundary costs are cascaded so that the overall result represents the cumulative least cost/most cost extremes. The results of these calculations shows that the actual value for each cost lies somewhere between the two calculated extremes, and that the values calculated using the best estimates available are between these two extremes.

3. Surgical Data

The data received from the surveys are summarized in this section. First, the raw data as received is summarized. This raw data contained a few errors and omissions that were correctable. The second section describes the reconstruction process and the data after reconstruction.

3.1 Primary Surgeries

Table 2 summarizes the totals based on the survey and the reconstruction techniques above. Totals are separated into Male-to-Female and Female-to-Male categories. US residential numbers are based on the 2000 US Census, eligibility is based on birth sex (e.g. those born male are the population eligible for MTF surgery.) Numbers should only be considered significant to 2 digits.

Surgical Data / MTF / FTM / Total
Raw Number of Primary Surgeries counted / 866 / 336 / 1202
Estimated Additional Surgeries (reconstructed) / 79 / 39 / 118
Reconstructed Number Primary Surgeries by major surgeons / 945 / 375 / 1320
Estimated Primary Surgeries by other surgeons / 50 / 125 / 175
Extrapolated Total Primary Surgeries / 995 / 500 / 1495
Percent of counted surgeries on US residents / 74% / 86% / 77%
Primary Surgeries on US residents / 736 / 430 / 1166

Table 2: 2001 Surgical Frequencies

Filling in missing surgeon cost data based on published prices, and using overall averages for surgeries not attributed to a specific surgeon, surgical cost data was reconstructed to represent all primary surgeries. These primary surgical costs add up to about $14.5 million, ($10.3 million MTF and $4.2 million FTM) as shown in Table 3.

Dollar figures given by the surgeons were incomplete. Because some completed surveys with usable patient counts did not have costs attached, this data required reconstruction to be useful. Before reconstruction, raw MTF dollar figures for primary surgeries averaged $7,900, representing 471 patients. Raw FTM dollar figures averaged $13,000, representing 112 patients.

MTF / FTM / Total
SRS Count (Raw) / 945 / 375 / 1320
Total Cost (Raw) / $9,791,070 / $3,190,300 / $12,981,370
Average Cost/Pat / $10,361 / $8,507 / $18,868
SRS Count (Reconstructed) / 995 / 500 / 1495
Total Cost (Reconstructed) / $10,306,389 / $4,253,733 / $14,560,122

Table 3: Primary Surgery Cost Data

3.2 Additional Surgeries

Including costs for FTM bottom surgeries (hysterectomy, metoidioplasty, phalloplasty) is more difficult. The primary surgery concept does not apply to bottom surgeries. The estimates made here are based on interviews with a subject matter expert in the FTM community, and should be considered less precise than measured data. It is known from subject matter experts and web sites how much the bottom surgeons charge, but the number of FTM transsexuals who choose the different bottom surgeries must be estimated. Also, any qualified surgeon may do hysterectomies, so they are impractical to count directly. The actuarial costs for hysterectomies are publicly available, and the fraction of FTM patients undergoing chest surgery who also undergo the various bottom surgeries can be estimated.

Dollar figures given by the surgeons were incomplete. For bottom surgeries on US residents, 16 metoidioplasties cost an average of $10,481, and 10 phalloplasties on US residents cost an average of $23,743. In addition, the count of primary surgeries did not permit direct calculation of the count of bottom surgeries, requiring that estimates be used.

Subject matter expert estimates are that 50% have a hysterectomy, 5% have a Metoidioplasty, and 6% have a Phalloplasty. Based on data collected in the survey, the average cost of a hysterectomy is about $15,000, of a Metoidioplasty is about $10,500, and of a Phalloplasty is about $24,000. This results in an estimate of 250 hysterectomies totaling $3,750,000, 25 metoidioplasties totaling $262,000, and 30 phalloplasties totaling $720,000, for a total cost of $4,732,000.

Procedure / Frequency / Patients / Average Cost / Total Cost
Hysterectomy-Oophorectomy / 50% / 250 / $15,000 / $3,750,000
Metoidioplasty / 5% / 25 / $10,500 / $262,500
Phalloplasty / 6% / 30 / $24,000 / $720,000
Total / 100% / 500 / $9,500.00[iv] / $4,732,500

Table 4: FTM Bottom Surgery Estimates

Adding primary and additional surgeries brings the total spent by all US resident transsexuals for these medically necessary surgeries in 2001 to about $19.3 million.