In a reversal of state healthcare policy, transgender state employees in Maryland can now access gender reassignment surgery, hormone therapy and other transition-related care under their state-provided health insurance plans.
The change quietly went into effect at the start of this month as the result of legal negotiations in a discrimination case brought against the state by Sailor Holobaugh, a 31-year-old clinical research assistant in neurology at the University of Maryland School of Medicine in Baltimore.
The state agreed amid those negotiations to reimburse Holobaugh's transition-related medical costs to date and apply the new standard to all of its employee health plans, rather than fight Holobaugh's claim in court.
"This is basically a fabulous shift in policy," Holobaugh said in an interview.
The change makes Maryland the third state, after Oregon and California, to offer such coverage to its employees, according to Holobaugh's attorneys at Free State Legal, a nonprofit organization that represents lesbian, gay, bisexual and transgender clients in Maryland.
"Maryland has moved one step closer to achieving full equality and justice for transgender Marylanders," said Aaron Merki, the group's executive director, in a statement. "We celebrate this development, and look forward to a time when these discriminatory exclusions are removed from all public and private health insurance policies."
The change was announced publicly on Tuesday.
Holobaugh's case began in November 2012, when Holobaugh paid more than $6,000 out of pocket for a bilateral mastectomy as part of his transition, then said he was denied reimbursement for the surgery by provider CareFirst BlueCross BlueShield based on coverage restrictions under his state-provided policy.
Holobaugh appealed the decision with the Maryland Insurance Administration and the Maryland Attorney General's Office, he said. As the case dragged on, he also secured legal representation with Free State Legal.
Attorneys filed additional complaints on Holobaugh's behalf with the Equal Employment Opportunity Commission and the Maryland Commission on Civil Rights, and soon after began out-of-court negotiations to settle the case with officials in the state's Department of Budget & Management, which oversees state employee compensation and benefits, including health coverage.
The change strips language explicitly banning coverage for such procedures and care under state employee plans and replaces it with language adopted from the World Professional Association for Transgender Health outlining a broad array of transition-related care that employee plans will now cover.
The new inclusive policy applies to state employees, retirees and any dependents who are covered under their health plans, and covers mental health services, continuous hormone therapy and a variety of surgeries connected with gender transition.
"It's pretty exciting," said Holobaugh, who grew up in Takoma Park. "I think this will affect a large number of people, especially now that children can stay on their parents' plan until age 26" under the Affordable Care Act.
"It's a pretty sweeping change," said Jer Welter, managing attorney at Free State Legal. "It is going from care for gender transition being completely, categorically excluded in all of the plans, to being fully covered under all of the plans."
Welter said a 2007 executive order by Gov. Martin O'Malley banning discrimination against transgender state employees set a clear precedent under which to challenge the health insurance carve out, and that officials at the state were more than willing to work with him to change the policy when they heard about Holobaugh's case.
The Department of Budget & Management did not respond to a request for comment.
Nina Smith, an O'Malley spokeswoman, said the change was encouraged at the state level as a matter of fairness.
"Maryland will now provide full, comprehensive and equal health coverage for transgender State employees and their dependents," Smith said in a statement. "This update to the State's policy is in line with the O'Malley-Brown Administration's efforts to ensure fairness and dignity for all Marylanders."
It was unclear Monday what the projected cost of the changes will be to the state moving forward.
Nothing in the new language opens the door to transgender state employees recouping out-of-pocket costs for transition-related care in the past, though Welter said employees in that situation could seek legal counsel to look into the possibility of retroactive reimbursements.
The shift in policy follows other victories for the transgender community this year, including passage of a bill preventing discrimination against transgender people in housing, employment and other public accommodations in the state and the expansion of Medicaid coverage of transition-related care. On Monday, President Barack Obama also signed an executive order banning discrimination against gay and transgender people by federal contractors.
But there have also been setbacks for the transgender community locally, including two separate and unsolved murders of transgender women in the city in the last two months.
Carrie Evans, executive director of Equality Maryland, the state's largest LGBT rights organization, said 2014 has been a "monumental year" for transgender individuals in the state, but that more work remains.
"We applaud these advances and at the same time remain very cognizant that changing the legal landscape does not translate to acceptance and safety for transgender people as police still work to find the killers of Mia Henderson and Kandy Hall in Baltimore," Evans said in a statement.
Holobaugh, who has been reimbursed nearly $4,500 of his surgery costs, said he hopes the shift for state employees will help spur further changes under private insurance plans in the state. The Maryland Insurance Administration issued a bulletin informing insurance carriers in the state that they can't discriminate against transgender patients in January, but stopped short of requiring carriers to cover reassignment surgery or other transition care.
Welter said the state's decision to cover such treatments for its own employees, a change that is gaining traction in other states as well, is a sign of progress in the right direction.
"We are certainly hoping that this decision is part of a real ground swelling that we're seeing, a real sea change, this year," he said. "We are certainly hoping to build on this victory. There's a lot more work to be done in Maryland."
An earlier version of this story gave an incorrect figure for Holobaugh's surgery costs. The Sun regrets the error.