I think that this is not about discrimination. It is that these people are an enormous burden on taxpayers when they need medical treatment/procedures.

Taxpayers should not be paying for this.

Oh yes, we have to be careful. However, if you are trapped inside the body of the wrong sex it's only fair the taxpayer covers the costs. Mind you from a practical point of view the military will expect 'Sid the plumber' to have progressed a little further than packing out his bra with loft fibre glass insulation. Sid must have already been under the knives in Thailand or wherever and got the t-shirt, before he thinks about becoming a 'USA seal'