I think this is the right move. Delisting OHIP funding for sex change operations 10 years ago seemed vindictive and petty, considering the tiny cost to the provincial treasury, and more inspired by the "Us versus Them" approach to public policy under Mike Harris.
A good friend of mine is a F-M transsexual. I met him when he was female and we both worked for one of the worst employers we both ever had. Despite the working conditions, we hit it off and became good friends. Several years ago, he took me aside and told me he'd always thought of himself as male, even though he had been born female (and was still at that time). He told me how he used to look in the mirror before puberty hit and see himself as a boy. Once puberty hit, it was downhill from there, depression set in and many years of anxiety and confusion. For him, sex re-assignment surgery was very necessary for his mental health.
For me, this is an issue of compassion and acceptance of reality. While $20,000 in one-time funding isn't much for the province to provide, it is a huge expense for individuals struggling to make ends meet.
There are, of course, many other urgent health care needs that the province should fund for the mental health and betterment of all Ontarians (IBI programming for autistic children being one that easily comes to mind, which the McGuinty government has shamefully failed to improve as promised).
But a good policy decision should be applauded and this is one.