SCOTUS rules in favor of Hobby Lobby, against ACA on contraceptive mandate

June 30, 2014

The justices' 5-4 decision is the first time the high court has ruled in favor of for-profit businesses holding religious views under federal law

The Supreme Court ruled on Monday that "closely held" for-profit corporations can hold religious objections that allow them to opt out of the requirement to provide no-cost contraceptives for female employees under the Affordable Care Act (ACA). The justices' 5-4 decision is the first time the high court has ruled in favor of for-profit businesses holding religious views under federal law. 

As a result of the decision, the companies filing suit-Hobby Lobby Stores and Conestoga Wood Specialties, as well as Hobby Lobby-subsidy Mardel Christian book stores-will not have to offer women employees all Food and Drug Administration-approved contraceptives as part of a package of preventives services required under law to be covered without copays or deductibles. The Christian-based companies mainly object to the emergency contraceptives known as Plan B and Ella, and two types of intrauterine devices, believing the therapies are abortion equivalents, which violate their religious convictions. Nearly 50 businesses have sued over being required to cover contraceptives. 

Under the ACA, employers with 50 or more workers who offer coverage that do not cover all FDA-approved contraception methods for women without cost-sharing would face fines up to $100 a day per worker under the ACA. Large employers not offering any coverage would face a fine of $2,000 for most employees. For example, Hobby Lobby would have faced fines of $475 million per year for excluding some forms of birth control from their health coverage. 

Impact on ACA

In an interview with Managed Healthcare Executive earlier this year, Stuart Gerson, senior partner of EpsteinBeckerGreen, and former acting U.S. Attorney General under President George H.W. Bush, said that the burden on Hobby Lobby is slight because ultimately the individual employees will decide for themselves whether to obtain and use contraceptives. While he says that any Supreme Court ruling has national impact, the decision on the case won't sigificantly disrupt health reform either way. 

“I know there are people out there wringing their hands [about the case], and others are celebrating that a victory for Hobby Lobby will spell doom for the Affordable Care Act, but I see no reasonable basis to accept such an argument,” he says. “This is an outlier issue. It’s profoundly important to the people involved in it-I don’t belittle that. But the rest of the Affordable Care Act is going to be unharmed.”

He also said the economic impact of the ruling is small, and that the outcome of the case will not materially affect employers’ decisions to offer health insurance or increase the numbers of the uninsured.

 

Far-reaching implications

On the other hand, Edward Buthesium of Berkeley Reaserch Group and formerly of GlaxoSmithKline says that the ruling has potentially far-reaching implications. 

"The Supreme Court holding in [Burwell v. Hobby Lobby Stores, Inc.] is sure to bolster the religious right as it gears up for upcoming midterm election battles over the lightening rod that has become the Affordable Care Act," he says. "The Court’s ruling that closely held for-profit corporations may constitute 'persons' within the meaning of the Religious Freedom Restoration Act (RFRA) has conferred upon these entities the right to deny the provision of birth control coverage on religious grounds, and has left opened the door to challenge other government mandates based on religious grounds, for example mandatory vaccination programs."

In Justice Samuel Alito's majority opinion, he stressed that the ruling applies only to corporations under the control of just a few people for which there is no essential difference between the business and its owners.

"Our decision should not be understood to hold than an insurance-coverage mandate must necessarily fall if it conflicts with an employer's religious beliefs," Alito said. 

However, Buthesium says the Court's ruling leaves certain questions left unanswered. 

"The question [remains] on when a private corporation becomes too large such that the owner’s religious beliefs aren’t deemed to be the alter ego of the corporation’s. It also leaves open the question of just how 'substantial' the burden must be on the practice of religious freedoms protected by the RFRA, and whether such burden can be measured in economic or moral terms," he says. "Time will tell how or even if these questions will be answered."