Supreme Court backs Hobby Lobby; employers can deny contraceptive coverage

The U.S. Supreme Court ruled Monday that the Affordable Care Act cannot force closely held companies to cover contraceptives in employee insurance plans if the corporation owners have religious objections to birth control.

The ruling favors two companies: Hobby Lobby of Oklahoma City and Conestoga Wood Specialties of East Earl, Pa.

“We must decide whether the challenged HHS regulations substantially burden the exercise of religion, and we hold that they do. The owners of the businesses have religious objections to abortion, and according to their religious beliefs the four contraceptive methods at issue are abortifacients,” read the court's majority opinion read by Justice Samuel Alito. Abortifacients are drugs that induce abortions.

The majority ruled 5-4 in Burwell v. Hobby Lobby that the Religious Freedom and Restoration Act doesn't allow the Obama administration to force private companies to cover birth control methods like the morning-after pill and intrauterine devices, which some religious objectors say are tantamount to abortion.

The 2010 healthcare reform law required insurance plans to cover preventive healthcare services for women, which the Institute of Medicine later defined to include all 20 contraceptive products approved by the Food and Drug Administration. Nearly half of all pregnancies in the U.S. are unintended, which can cause adverse health effects for women and children, according to HHS (PDF), which eventually adopted the institute's recommendations into the law.

But many private companies objected (PDF), saying the requirement violated their religious rights. Specifically, federal law says the government cannot substantially burden a person's exercise of religion unless it's done in the least-restrictive way to accomplish a legitimate government interest.

Critics in the court's minority opinions said the conservative majority's decision would allow for-profit companies to “opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.”

Alito's majority ruling rejected that notion, saying the administration had already created a system for accommodating corporate owners who have religious objections to the rule, when it allowed religious not-for-profits to allow third-party insurers to provide coverage if they agreed to sign forms certifying their objections in writing. The court suggested HHS could side-step the entire controversy be extending the same accommodation to any company whose owners object:

“The effect of the HHS-created accommodation on the women employed by Hobby Lobby and the other companies involved in these cases would be precisely zero,” Alito wrote. “Under that accommodation, these women would still be entitled to all FDA-approved contraceptives without cost-sharing.”

Although this particular decision doesn't threaten the future of the healthcare reform law, it has ignited passions nationwide by drawing on topics like religious freedom, women's rights, abortion and a reform law that remains controversial four years after its passage. The lawsuit is also one of many legal challenges pending in courts across the country that are designed to chip away at every conceivable weakness in the 900-page statute.

A second spate of 51 lawsuits filed mainly by Roman Catholic organizations like the University of Notre Dame and the Catholic Archdiocese of New York also appears headed to the Supreme Court. In those cases, religious not-for-profit employers argue that a compromise allowing them to opt-out of the requirement to cover contraceptives in employees' plans was not adequate because the employers still have to sign forms assigning that coverage to an outside insurance provider.

Monday's decision did not resolve those cases. The most well-known of them is Little Sisters of the Poor v. Sebelius, which is pending in the federal appeals court in Denver. In January, Supreme Court Justice Sonia Sotomayor ordered the Obama administration not to enforce the contraceptives-coverage requirement against the Catholic order of nuns until the lawsuit is resolved.

Monday's decision marked the second time that a conservative majority of the Supreme Court has struck down aspects of the Democrat-passed reform law. In 2012, the court ruled that Congress could not force states to expand eligibility in their Medicaid programs, although the court uphold the law's requirement that nearly all Americans buy insurance coverage in that same decision.

With the Hobby Lobby litigation resolved, many eyes will turn to a set of four lawsuits that do appear to threaten the financial underpinnings of the reform law.

In Halbig v. Sebelius, a three-judge panel of the federal appeals court in Washington is set to decide soon whether the reform law was intentionally written to exclude federal insurance subsidies for people who buy insurance through online exchanges established by the federal government.

Although the black-and-white terms of the law do limit subsidies to people who use state-run exchanges, proponents and judges in two federal courts have concluded that was essentially an error that contradicts the overall intention of the law to expand insurance coverage as widely as possible.

A group of prominent economists has estimated that about 6.5 million people in the 36 states with federally run exchanges would lose their subsidies and likely their insurance coverage if the Supreme Court eventually agrees with the plaintiffs in Halbig.

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