At present, only six states (CA, MA, VT, DC, NY, and OR) provide Medicaid coverage for GRS, although some others do cover HRT.
Here's a
fairly recent update on insurance coverage in Washington state. The state insurance commissioner issued a ruling last year to the effect that private insurance companies must cover transition-related health care when it involves procedures which are covered for other medical conditions. This means that HRT and mastectomy, for example, must be covered, but an insurer which doesn't cover breast implants in general would not have to cover them for transgender patients. Transgender health care, including GRS, is also now covered under the WA public employees' policy. Unfortunately, these rulings don't apply to Medicaid, which is run by a different agency.
However, changes are starting to happen at the federal level:
according to Lambda Legal, this fall the Dept. of Health and Human Services will be issuing
"proposed rules under section 1557 of the ACA. Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age or disability for any health program receiving federal assistance, and HHS has stated further that section 1557's sex discrimination prohibition extends to gender identity or failure to conform to conventional notions of masculinity or femininity." If these rules take effect, it's hard to see how they won't apply to state-run Medicaid programs -- although I'm sure there'll be lots of foot-dragging.