What The Hobby Lobby Decision Means For Employers

KHN’s Mary Agnes Carey and legal analyst Stuart Taylor discuss Monday’s ruling on the health law’s contraception mandate, examining what the decision could mean for future challenges to the law.

MARY AGNES CAREY: Welcome. I’m Mary Agnes Carey. 

By a vote of 5 to 4, the Supreme Court has ruled that family-owned, closely held corporations do not have to comply with the health law’s contraception coverage requirements if they violate the owner’s religious views. Legal analyst Stuart Taylor Jr. joins us now to discuss the decision. Thanks for being with us.

STUART TAYLOR: Nice to be with you.

MARY AGNES CAREY: Why did the court rule this way?

STUART TAYLOR: Well, the court held that under an act of Congress passed in 1993, the Religious Freedom Restoration Act, the right is conferred on all religious groups, including, the court said in this case for the first time, for-profit corporations as well as churches and, say, nonprofit religious groups — they all get broad protection of their religious freedoms. And in a very detailed analysis of the various steps you go through under this law, first, can you invoke protection at all if you’re a for-profit corporation. The court said yes. Then, does it substantially burden your religious exercise. The court said yes, because these companies have objections to providing contraception coverage, and then they go on and say is this the government’s least restrictive means they could use to serve the need of the women who want the contraceptives, in this case. And the court said no; they have other ways they could to it. The government could pay for it or they could use an accommodation they are already using for nonprofit religious employers.

MARY AGNES CAREY: These companies, Hobby Lobby, which is a very well-known craft store, and Conestoga Wood Specialties, which is a cabinet maker, what were their arguments against the contraception mandate?

STUART TAYLOR: Unlike the Catholic groups that are also challenging the mandate, these groups have a religious objection only to what they call abortifacients—the morning after pill, certain kinds of IUDs that they think operate to induce abortion.

Now, it doesn’t induce abortion as the government describes abortifacient, but it does in the beliefs of these companies. And the government says they are entitled to their beliefs. So [companies] say: For us to help someone get that kind of contraception, violates our religious beliefs. We cannot do it without violating our religious beliefs. The government is trying to force us to do it against our religious beliefs, and that puts us in a terrible position, because the fines are enormous for not complying with this provision of the Affordable Care Act.

What The Hobby Lobby Decision Means For Employers

Anti-abortion advocates cheer in front of the Supreme Court after the decision in Burwell v. Hobby Lobby Stores (Photo by Chip Somodevilla/Getty Images).

For Hobby Lobby, which is a pretty [good-sized] company, it would be fines of $1.3 million a day, or $475 million a year, if it refuses to provide all federally approved contraceptive coverage, including these so-called abortifacients, and they say that’s an intolerable burden: We shouldn’t be put to that choice and the Religious Freedom Restoration Act exempts us from that choice.

MARY AGNES CAREY: What does this ruling mean for female employees of Hobby Lobby and similar companies that have objections to some forms of contraception coverage?

STUART TAYLOR Jr.: In this case, it’s not going to have much effect. In fact, the majority opinion says the effect of this on the women employed by Hobby Lobby and other companies involved in these cases would be precisely zero. And the reason is that the court says if the administration extends the same so-called accommodation to these religious employers who are for-profit companies then it’s already extended to nonprofit Catholic hospitals, nonprofit religious schools, nonprofit religious colleges, and nonprofits – if it extends the same so-called “accommodation” to these for-profit companies, that it has already created for the nonprofit companies, then the women will get the coverage anyway through the same insurance companies that cover everything else.

MARY AGNES CAREY: So these accommodations, the justices suggested, for example, number one, the government can pay for it. Or, they could put into play some accommodations that are already there for religiously affiliated employers, which is having the insurers cover it.

STUART TAYLOR Jr.: Yes, and that’s a tricky little thing that would apply in this case and not many others. And what makes it work is that the cost of providing the contraceptive coverage is really about zero, whether it’s the employers paying for it or whether it’s the insurance company that’s paying for it because they save money on the other end, because they don’t have the child birth expenses, which are larger than contraceptive coverage. So nobody’s really paying out much money. It’s a matter of who’s got the symbolic function of providing the coverage.

This accommodation that’s already been given to nonprofit employers basically says: OK, all you have to do is certify that you have a religious objection to providing this coverage and then the government will require that your insurance company provide the coverage at no cost to you. And that’s what’s being done already in some cases — and what the court now says they can do in the cases of company, for-profit companies like Hobby Lobby. 

MARY AGNES CAREY:  There are many other non-profit employers like Catholic hospitals that have said even these accommodations, these other arrangements, are going to violate their religious beliefs. So what does this mean for them?  

STUART TAYLOR:  That’s right, and the reason they say it violates their religious beliefs is that they are required, at least by the regulation to certify to the insurance companies that they have this religious objection, then that triggers the insurance companies obligation to provide it. So these companies are saying, yeah, but if we have to certify and then it gets provided that means we are doing what we object to doing, which is providing a link in the chain of causation that leads to women using contraceptives. 

So it’s a little peculiar because the court has said that Hobby Lobby and its co-plaintiffs who do not object to the certification can be covered by this, but at least technically the possibility remains that the court would eventually decide that you cannot require, say, Catholic organizations that object to providing the coverage to object to certifying that they won’t provide the coverage to do so.

MARY AGNES CAREY:  Does this ruling mean that privately held for for-profit corporations can ignore other requirements of the health law if they find those requirements objectionable on religious grounds?

STUART TAYLOR:  Justice Ginsburg’s long and eloquent dissent implied that, but the majority and more specifically Justice Kennedy who provided a concurring opinion say that no that wouldn’t really do that, it’s not nearly as broad as Justice Ginsburg says it is. The quote is Justice Kennedy says: The Court’s opinion does not have the breadth and sweep ascribed to it by the respectful and powerful dissent of Justice Ginsburg’s. So you have a disagreement between the dissent and at least some of the majority of whether this is going to be a far reaching decision or whether it’s going to be one that covers this case and not too many other cases.

MARY AGNES CAREY:  What did Justice Ginsburg mean in her dissent when she called the ruling a decision of startling breadth?

STUART TAYLOR:  She meant that, she went on to say, that it says: The court holds that commercial enterprises, including corporations, can opt out of any law, except tax laws, they judge incompatible with their sincerely held religious beliefs.

It would be a decision of startling breadth if the court had said that. But as the majority and Justice Kennedy’s concurrence both say: No, no, no, Justice Ginsburg. It isn’t nearly as broad as you’re saying it is.

And, by the way, this kind of dialogue is fairly common when dissenters, in order to emphasize what terrible things could happen as the result of a decision they don’t like, they tend to read it as broadly as possible to make it sound worse, and then the majority tends to say: Oh, no, it’s not that broad. And you never really find out how broad it is until the next case comes along.

MARY AGNES CAREY:  What does today’s decision mean for other litigants who are challenging the contraception mandate because they say it violates their religious freedom?

STUART TAYLOR:  I think most of them are going to win their cases if they can make it clear that their religious objections are sincere. I think most of them can, or they don’t file lawsuits.

It should be clear: A public company, certainly a big public company, would not be able to pull off a sincere religious objection of this kind, because the bigger a company gets, the less likely it is that all of the people who have an ownership or management interest in it are of the same religion and share the same objections. So this is, by its nature, this sort of logic is confined to family-owned companies, or maybe companies owned by a small group of like-minded religious people who say their religion is very important to the way they operate their businesses.

Hobby Lobby is quite a big company, for example, but still we’re not talking about General Motors or Ford or McDonald’s or any companies like that.

MARY AGNES CAREY:  That you so much legal analyst Stuart Taylor.

STUART TAYLOR:  Thank you.