Usual shitty low-information reporting.
The Medical Standards for the army provided that those admitted should not have
"a [c]urrent or history of psychosexual conditions, including but not limited to transsexualism, exhibitionism, transvestism, voyeurism, and other paraphilias""
this was changed on June 30 2016 by the Obama administration to repeal this with respect to transgenderism.
Trump repealed this on August 2017, saying 'no transgender people in the military', but this was challenged, and on March 23 2018 put out a memo cancelling the August 2017 memo and allowing the DoD to put in place restrictions.
The Mattis recommendations, issued post-August 2017, and pre-March 2018 (so essentially less restrictive than Trump's initial 'no transgenders), which are essentially the current policy:
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serving personnel who were diagnosed with gender dysphoria while the old policy was active can get treatment on the government dime, and serve as the gender of their choice
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serving personnel who are/were diagnosed with gender dysphoria at any other time, can continue to serve, but only in their biological sex
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anyone whose gender identity differs from their biological sex can serve, but only in their biological sex. If they also have a diagnosis of gender dysphoria they must have lived in their biological sex for 36 months prior to joining
The point I think that is being missed here, and it is a big one, is the drive to make 'gender identity' something that is NOT deemed to be a disorder. Indeed DSM-5 uses 'gender dysphoria' rather than 'gender identity disorder' in DSM-4. That's to avoid the nasty word 'disorder', which political trans activists want gone, because as with Mermaids they want to say that it's essentially a neutral choice whether your child is castrated, infertile & has osteoporosis at 25, or not.
I think it's important to see the vast, gaping chasm between the way the TRAs would have it, and something that approaches objectivity.
For example, if I am a male rapist and I 'identify' as a woman by putting on a dress and going into a female space, then the TRAs would say that my identity is true and valid, just because. But psychologists still, today, would say that that identity is a disorder that can be diagnosed, and one that has "clinically significant distress or impairment". If I get my rocks off by wanking in my wife's panties, then that's NOT by itself gender dysphoria.
So here we see in terms of the military policy first of all an attempt to pin down what the fuck it actually means to be trans. For a lot of people it's something you do on Twitter or whatever. 'I say I am a woman therefore I am'. That's however meaningless drivel. 'A man' who identifies as 'a woman', but who wears 'butch' clothing is indistinguishable from a 'man'. In fact a lot of people who claim to be transgender don't, er, seem to do anything about it.
And saying 'I'm carrying a handbag, so you must perceive me as a woman' is sexist and regressive as fuck. Men can carry handbags, it's nobody's business.
Clearly the diagnosis for gender dysphoria is a valid criterion here (even if there are nutters like Dr. W who will knock them out for £50 over the internet), and 'being trans' is a meaningless statement.
So you have someone who is diagnosed as suffering from gender dysphoria, hence IS trans, rather than someone pretending to be trans (the TRAs won't accept this criterion, but fuck them), and if they're not diagnosed with this then clearly the claim to be trans is ridiculous in the first place, and there's not even a QUESTION about their eligibility.
And then if they have the GD diagnosis they are saying
(a) no biological males serving as women (because duh) or vice versa
(b) we won't pay for your surgery (because why should they?)
They have been trying to say that the cost of the treatment 'is not that much' or whatever out of the army's trillions, but more fundamentally to what end are you trying to transition? If you are going to transition to 'become a woman' then how does that work with being a soldier?
And note that the policy memo literally ONLY says that the DoD can make policies (it doesn't place any restrictions of itself), so potentially if there are jobs/branches of the military where there are fewer issues then they can allow people to transition.