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Akron Univ. School of Law

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Sunday, June 22, 2014

Waiting for Hobby Lobby

Since the likelihood is that many readers of this blog will be asked to comment about whatever opinion the Supreme Court issues this week, here’s a quick refresher.   The Hobby Lobby and Conestoga Wood Specialty cases are challenges to the Affordable Care Act's requirement that employers who choose to offer health insurance to their employees must provide policies that include ten essential benefits-including contraception.  The U.S. Supreme Court has heard oral arguments and read the briefs—it’s likely that whatever opinion is issued will reflect at least some of the arguments presented to the Court.    

This case is about the Affordable Care Act’s requirement that employers who offer their employees health insurance must  offer policies that provide ten essential benefits, including contraception.  Hobby Lobby and Conestoga Wood are privately held, for-profit companies whose owners have sincerely held religious objections to providing four specific kinds of contraception.  They believe these contraceptives terminate rather than prevent pregnancy.  Many religious organizations and companies have gotten exemptions to these requirements, but this case considers whether private, for-profit companies should qualify as well.

The cases raise (at least) three major issues:

1.Does the Religious Freedom Restoration Act apply to corporations even though it uses the word “person?” (Can companies have religious beliefs?)

2. Is providing insurance that covers birth control a “substantial burden?” on these two company’s' religious beliefs?

3. Does the government have a compelling reason for requiring companies that provide insurance to offer policies that cover all the forms of contraception specified in the ACA?

 It is likely that this decision will address (I almost said clarify, but who knows?) the limits of a law passed by Congress in 1993 to over-rule an earlier Supreme Court Decision, Employment Division v. Smith, holding that so long as a law passed by the federal government “applied to everyone” everyone was required to follow it even if it interfered with their sincerely held religious beliefs.  In that case, Native American employees of a drug rehabilitation clinic challenged their firing for the use of Peyote as unconstitutional since using the drug was part of their sincerely held religious belief.  At that time the Supreme Court held that so long as a law applied to everyone, everyone had to follow it even if it infringed on some people’s beliefs.

Until now, there has never been a case where a “company” had religious beliefs.     There are legal advantages to doing business as a company rather than as an individual or a partnership.  The main one is that the owners aren’t personally responsible for the company’s debts or actions.  If the company goes bankrupt, the owner’s personal assets aren’t at stake.  If the company gets sued, the owner won’t have to pay the judgment.

  A few reminders about how ACA works—no company in the United States has to provide health insurance to its employees.  If it chooses not to, the employees would be eligible to buy subsidized health insurance through the exchanges. Because it employees more than 50 people, Hobby Lobby would have to pay the government $2000 per employee to cover the cost of the subsidized insurance-this called the Employer Shared Responsibility Provision. These payments are postponed until 2015, i.e. they haven’t happened yet, but this how the Kaiser Foundation says they will work.

 Kaiser estimates that this is at least half of what it would cost employers to provide health insurance meeting the minimum ACA standards.  This led Justice Sotomayor to suggest that during the oral argument that Hobby Lobby simply drop all health insurance coverage. What the affordable care act did was set standards for insurance just like there are standards for food and drug products.    The effect is there are no “junk” plans.  Every health insurance plan has to cover 10 essential benefits including vaccinations, annual exams, contraception and pregnancy costs.  So the rule isn’t on the companies that buy insurance, it’s on the insurance available to buy.  It’s the same as not being able to buy a car without seatbelts.

Unlike the Affordable Care Act decision that once decided effectively resolved a dispute and faded away, it is likely that whatever the result the decision here will be the basis of considerable analysis and is likely to be an important addition to the body of precedent interpreting the First Amendment’s Free Exercise clause.

 The new law, a short one and worth reading in full, the Religious Freedom Restoration Act, essentially reverses Employment Division v. Smith by stating that even if a law applies to everyone, if it substantially burdens anyone’s sincerely held religious beliefs the government has to show a compelling reason for the law and has to show that the law is the least restrictive way of achieving the law’s goals.

 

Until now, there has never been a case where a “company” had religious beliefs.     There are legal advantages to doing business as a company rather than as an individual or a partnership.  The main one is that the individual’s owners aren’t personally responsible for the company’s debts or actions.  If the company goes bankrupt, the owner’s personal assets aren’t at stake.  If the company gets sued, the owner won’t have to pay the judgment.

 At this point, there isn't much more to do but wait.   It's hard to break the speculating habit since many of have spent the past three years spinning scenarios.

For example, it’s unclear how far a decision that a private company could be exempt from federal laws that go against its religious beliefs would go.  For example, a company with a religious belief that women shouldn’t work outside the home might claim that it would not have to follow laws prohibiting sex-discrimination.

 Within the health insurance field it’s also unclear how far a company could pick and choose—for example, could a company decline to cover immunizations or blood transfusions.

 It seems likely that a company could choose to cover contraception for married employees but not unmarried employees.   Stay tuned, we will probably know more tomorrow—or at least by June 30th.

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