Healthcare costs following medical gender-affirmation: Evidence from whole-of-population Australian administrative data
Melbourne Institute Working Paper No. 21/25
Date: December 2025
Author(s):
Abstract
Gender incongruence in trans and gender-diverse (TGD) populations is often associated with psychological distress and increased demand for mental healthcare. Gender-affirming hormone therapy (GAHT) is a necessary component of care for many TGD people, yet long-term evidence around its cost implications remains limited despite increasing demand and policy attention worldwide. We provide the first population-based evidence on the healthcare costs of GAHT initiation using longitudinal administrative data from 32,023 TGD Australians who initiated testosterone-based GAHT or oestradiol-based GAHT between 2013 and 2024. Employing a dynamic difference-in-differences design, we estimate the impacts on government expenditure and patient out-of-pocket costs in the five years after initiation, using future initiators as controls. We find that initiating testosterone-based GAHT leads to an additional AUD$2,958 (USD$2,130) in government expenditure and AUD$125 (USD$90) in out-of-pocket costs over five years; corresponding estimates were AUD$8,140 (USD$5,861) and AUD$1,354 (USD$975) for oestradiol-based GAHT recipients. For testosterone-based GAHT recipients, both government and out-of-pocket costs declined after initiation, with mental healthcare reductions exceeding ongoing hormone therapy expenditure after five years. For oestradiol-based GAHT recipients, costs also fell but remained above baseline, driven by sustained prescription spending. Taken together with quality-of-life benefits, our results suggest GAHT is likely to be cost-effective.
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