That's silly. Of course it should be covered, as long as it's not an elective surgery. I have a big bump in my nose from getting in a fight in 9th grade, and I have the weakest chin you've ever seen. I mean, my bottom lip practically falls into my chest. But guess what, if I wanted to get my health insurance to cover either of those they'd laugh in my face because they are cosmetic and thus, elective. Now that I have said that, as I've gotten older, I've picked up a pretty horrific snoring problem. I thought it was because I was 270lbs, so I got skinny-ish and it didn't help. In fact, it kept getting worse and worse. It started affecting my sleep, and thus, my daily routines were mired in sleepiness. I went to a sleep specialist, got hooked up to this weird machine, and slept at the Dr.'s office. They found that I had sever sleep apnea caused by my weak-*** chin collapsing into my throat, and my big old nose that was deformed from that fight was also to blame. I guess there are "things" up there that humidify the air going in, etc. and they were completely and permanently swollen/pushed back to where they were worthless. Now all of a sudden it's not elective, and my health insurance is paying for me to get fixed. (not doing the chin/jaw surgery -- I read about it and it is INSANELY nasty, the recovery is horrific, and they told me there is only a 50/50 chance it will do anything)
Just like depression and homosexuality, being transgendered isn't something you wake up one day and think, "You know what, I think I want to be a girl from now on." Are there people who actually do that? I'm sure there are, but most of the time it is something that you are born with, or that you develop as you get older. The brain is an amazing machine, but even the slightest altering of certain chemicals, or lack there of, can mean severe changes in behavior, looks, mood, etc. If a person feels like they need to get SRS, then they need to go through the same steps that any other person would have to go through in order to make sure that it isn't an elective surgery. If a therapist or doctor can sign off on your condition/treatment, then it needs to be covered by your health insurance.
Just my 2 pennies.