Defining Discrimination in Health Care

Scholars are now debating how the U.S. Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo will impact health care regulation. Courts must now independently “determine the best reading” of statutes rather than deferring to reasonable agency interpretations of ambiguous statutes.

Recently, the debate has focused on a rule interpreting a section of the Patient Protection and Affordable Care Act (ACA) designed to limit discriminatory practices in the provision of health care.

Section 1557 of the ACA prohibits entities that receive federal funding, such as health care providers or insurance companies, from discriminating against patients based on their “race, color, national origin, sex, age, or disability” when the entities engage in certain activities, such as providing medical care or insurance coverage.

In April 2024, the U.S. Department of Health and Human Services (HHS) issued a final rule that aims to “advance equity and reduce disparities in health care,” in which the agency interpreted Section 1557’s provision on sex discrimination.

In the new rule, HHS revised its previous interpretation of sex discrimination in Section 1557 to also include, among other characteristics, discrimination based on “gender identity.” Many states have objected to this inclusion.

If enforced, the rule would prohibit “blanket exclusions” on gender transition services, including refusals to cover a treatment that insurance would otherwise cover because the service is “typically associated with one particular gender” or being used for gender transition purposes.

HHS clarifies that its revised definition of sex discrimination aligns with the Supreme Court’s 2020 decision in Bostock v. Clayton County, in which the court held that the prohibition on sex discrimination in Title VII of the Civil Rights Act of 1964 includes discrimination based on sexual orientation and gender identity. The agency’s current interpretation also adopts the definition from the U.S. Department of Education’s rule implementing Title IX, which prohibits sex discrimination in educational programs that receive federal funding.

HHS’s 2024 interpretation of sex discrimination returns the definition to language used by the agency in a 2016 rule, which HHS issued during the Obama Administration. The current interpretation contrasts with the agency’s 2020 rule, issued during the Trump Administration, which eliminated the 2016 definition because HHS’s rule had allegedly “exceeded the scope of the authority delegated by Congress in Section 1557.” As the Trump Administration reenters office, the current rule could face recission.

After HHS issued the current Section 1557 rule, prominent LGBTQ+ advocates—such as media advocacy organization GLAAD and civil rights organization the Human Rights Campaign—weighed in to support the rule. For example, the president of GLAAD stated that the new rule was a “reversal of Trump-era discriminatory rules” and “will have a direct, positive impact on the day to day lives of millions of people.”

Conservative groups, such as The Ethics and Religious Liberty Commission, objected to the rule, raising concerns that care providers could be “forced to administer or cover” treatments that offend their religious or moral values.

Two days before the final rule was scheduled to take effect and five days after the Supreme Court issued Loper Bright, however, three district courts barred HHS from enforcing the rule in Florida, Texas, Montana, and nationwide.

The district courts in each case ruled in favor of the plaintiff states, holding that the ACA’s prohibition on sex discrimination does not include discrimination based on gender identity.

In all three cases, the courts concluded that Bostock’s interpretation of Title VII’s prohibition of sex discrimination to include transgender discrimination “does not apply to Title IX” because the context of each statute and the language used within the statutes are “vastly different.” One court noted that Title VII addresses discrimination in the employment context, whereas Title IX, which Section 1557 incorporates, prohibits discrimination in education.

The courts also noted that the causation language in Title VII, which the Supreme Court in Bostock relied on, differs from the language in Title IX, further suggesting that Bostock should not apply. Title VII prohibits discrimination “because of” an individual’s sex, which the Supreme Court in Bostock interpreted as a “sweeping standard” that includes firing an employee for being transgender. Title IX, however, uses different language than Title VII, prohibiting discrimination “on the basis of” sex, for which the Supreme Court has not set a standard.

The courts concluded that the plaintiffs in each case, in establishing their entitlement to preliminary relief, also showed that enforcing the rule in their respective states would result in “irreparable harm” due to the costs associated with compliance. Tennessee, for example, argued that statewide compliance with the final rule would require an “administratively burdensome process” to accommodate “an immediate increase in state and federal expenditures” to fund gender-affirming care services not previously covered by state insurance programs.

All three district courts cited Loper Bright in their final opinion, each noting that a court “owes no deference” to HHS’s interpretation of Section 1557. For example, in Texas v. Becerra, the court explained that “every statute’s meaning is fixed at the time of enactment” and looked to the definition of “sex” when Title IX was enacted in 1972. The definition of sex had then included only biological sex.

As implementation of the final rule is delayed further by ongoing litigation, one scholar contemplates the fates that Section 1557 and the 2024 rule could face. At best, she argues, the rule may face years of delay before going into effect. The rule could also, however, “fall far short of its potential to remedy health disparities resulting from discrimination” following judicial intervention or the incoming presidential administration’s potential rescission.