SCOTUS ruling grants religious exemption for contraception

By Anthony Brino
12:01 PM

The U.S. Supreme Court sculpted a new religious exemption for employers, this time bringing women’s health into the political fray in a ruling sure to add its own complications to group insurance. 

In a 5-4 ruling in the Hobby Lobby case, the Supreme Court ruled that “closely held” companies like this arts and crafts chain do not need to comply with the federal government’s regulations requiring certain forms of contraception as a part of essential health benefits.

The justices writing for the majority stressed that the religious exemption should be granted solely for contraception, not healthcare services like vaccination and infusion therapy, and that the range of companies that are eligible should be narrow, following the Internal Revenue Services’ definition of closely held as one at least half-owned by five or fewer individuals.

Legally, the majority ruled, these private closely-held companies are considered “persons” under the Religious Freedom Restoration Act of 1993.

[See also: Beyond first wave of ACA enrollment: Population health.

An alternative for the federal government, the justices proposed, is to make contraception coverage available to the employees of companies like Hobby Lobby or Conestoga Wood, another plaintiff, via the same system created for employees of religious non-profit institutions.

“Although HHS has made this system available to religious nonprofits that have religious objections to the contraceptive mandate, HHS has provided no reason why the same system cannot be made available when the owners of for-profit corporations have similar religious objections,” wrote Justice Samuel Alito for the majority. “We therefore conclude that this system constitutes an alternative that achieves all of the Government’s aims while providing greater respect for religious liberty. And under RFRA, that conclusion means that enforcement of the HHS contraceptive mandate against the objecting parties in these cases is unlawful.”

Some analysts are predicting that that is exactly what the Obama Administration will do, although it could add more complexity to health plan administration depending on the roles specified for private insurers.

Justices Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor dissented from the majority and argued that requiring contraception coverage as a part of essential health benefits’ preventive services is not unduly burdensome. Though limited in the majority opinion to contraception, Ginsburg wrote, the ruling sets a precedent that could let employers "opt out of any law “ that “they judge incompatible with their sincerely held religious beliefs."

The ruling means that companies like Hobby Lobby will not have to choose between offering their employees coverage with services they object to or discontinue providing coverage and pay the employer mandate fine.

The impact could be negligible for payers, although it also could pose some hazards.
For insurers with risk-based group plans and self-insured clients, it could mean more-involved plan design on the part of employers. Insurance companies could also face public backlash for working with companies that deny their employees contraception coverage.

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