Here’s Why the Supreme Court Ruled Against Obamacare

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The U.S. Supreme Court decided back in June that in limited circumstances, for-profit companies can claim religious exemption to the Affordable Care Act’s contraceptive mandate. The decision, which applies to two companies owned by Christian families, was narrow, with the five more conservative judges — Chief Justice John Roberts and Justices Samuel Alito, Anthony Kennedy, Antonin Scalia, and Clarence Thomas — ruling that the healthcare reform’s mandated contraception coverage violated a federal law protecting religious freedom.

Justices Stephen Breyer, Elena Kagan, Ruth Bader Ginsburg, and Sonia Sotomayor voted against the majority. And while the decision was narrow, the implications of the ruling are vast. The ruling provides a precedent for other for-profit companies to challenge a number of laws that may be said to violate their religious beliefs.

“The Court says that the government has failed to show that the mandate is the least restrictive means of advancing its interest in guaranteeing cost-free access to birth control,” read a summary of the decision provided by the SCOTUS blog, meaning that those justices who wrote the majority opinion believe there are other ways the government can ensure that Americans employed by companies with religious objections to the mandate can obtain contraceptives.

Alito indicated in the majority opinion that such employees could obtain coverage through an accommodation that the Obama administration already made for religiously affiliated nonprofits, which allows health insurance companies to provide contraceptives without the involvement of the employer. Alito also noted that the “decision concerns only the contraceptive mandate and should not be understood to mean that all insurance mandates, that is for blood transfusions or vaccinations, necessarily fail if they conflict with an employer’s religious beliefs.”

At the most basic level, the court’s ruling has decided whether employers with religious objections to birth control may refuse to provide their workers with insurance that offers contraceptive coverage. The case also provided the Supreme Court an opportunity to examine complex legal and constitutional questions about religious freedom, the equality of female workers, and whether any protections exist in the Constitution or in federal statutes that excuse private, for-profit corporations from complying with the law because of their owner’s religious beliefs. But the justices largely eschewed a majority of those questions.

Since the passage of the healthcare reform law, more than four dozen lawsuits have been filed in federal court by various corporations challenging the birth control coverage mandate. Three federal appeals courts in Chicago, Denver, and Washington, D.C., struck down the contraception coverage rule, while two other appeal courts upheld it. With that so-called “circuit split” at the district court level and the great controversy over the mandate, the issue was taken up by the Supreme Court. Late last year, the court agreed to hear two particular cases involving for-profit corporations: the craft store chain Hobby Lobby Stores Inc. and Conestoga Wood Specialties Corp. On Monday, the court issued its decision.

The Obama administration said that for-profit companies like Hobby Lobby must comply with the healthcare reform’s mandated coverage provisions or face the associated fines. For example, by not offering comprehensive coverage to its employees, as is required by the employer mandate, Hobby Lobby would face fines of $1.3 million per day or fines of up to $26 million per year if the company stopped offering insurance entirely. That means that Hobby Lobby would be better off financially if it dropped employee insurance coverage altogether.

Hobby Lobby and Conestoga argued that the mandated coverage of birth control services is a “substantial burden” on their free exercise of religion by forcing them to provide a service that violates their religious beliefs. Even though employers pay for the insurance program and not the pills themselves, the plaintiffs stated in court briefs filed in February that the mandate still restricts their religious rights. They “object to being forced to facilitate abortion by providing abortifacients, and that objection does not turn on the independent decisions of their employees,” according to the papers.

With that argument defining the two cases — Burwell v. Hobby Lobby Stores and Conestoga Wood Specialties v. Burwell – the court’s interpretation of 1993’s Religious Freedom Restoration Act was essential in determining whether non-religious, for-profit corporations should be exempt from the contraceptive insurance mandate. Originally, the law was passed in response to a 1990 Supreme Court decision, Employment Division v. Smith, which made it more difficult for individuals and groups to obtain exemptions from laws and government actions that may burden religious practice.

Prior to that court decision, the government needed to prove there was a “compelling interest,” like protecting public safety, before applying a law that burdened the freedom of religious practice. After that court case, the government was required only to show that it had a “legitimate interest,” a much less rigorous standard. This ruling marks the first time that the Supreme Court ruled for-profit companies can make claims under the Religious Freedom Restoration Act.

To be clear, Hobby Lobby and Conestoga only objected to a small percentage of the contraceptive methods included in the mandate, namely those that prevent embryos from implanting in the womb. The companies argue that those methods are tantamount to abortion, and that by providing that coverage, they would be complicit in the practice. But neither company has a problem with providing other forms of contraception, including condoms, diaphragms, sponges, several varieties of birth control bills, and sterilization surgery.

“The companies in the cases before us are closely held corporations, each owned and controlled by members of a single family, and no one has disputed the sincerity of their religious beliefs,” Alito wrote in the majority opinion. The definition of a closely held corporation is key to understanding the ruling, as Alito’s comments illustrate. The court’s decision is restricted to closely held for-profit businesses, where at least 50 percent of stock is held by five or fewer people, as in a family-owned business.

The Department of Health and Human Services argued that “the companies cannot sue [the government agency] because they are for-profit corporations, and that the owners cannot sue because the [Obamacare contraception] regulations apply only to the companies,” according to the ruling. But the Supreme Court did not find that argument to be valid. In the majority opinion, Alito writes that the claims made by HHS would “leave merchants with a difficult choice: give up the right to seek judicial protection of their religious liberty or forgo the benefits of operating as corporations.”

The Religious Freedom Restoration Act was designed by Congress to “provide very broad protection for religious liberty and did not intend to put merchants to such a choice,” per the majority opinion. That legislation “employed the familiar legal fiction of including corporations within [its] definition of ‘persons,’” meaning that in the eyes of the majority, corporations have the same religious rights as a person. And the “purpose of extending rights to corporations is to protect the rights of people associated with the corporation, including shareholders, officers, and employees.”

As the majority opinion makes clear, Alito declined to make a strong distinction between individuals and corporations when it came to fundamental rights. “A corporation is simply a form of organization used by human beings to achieve desired ends,” he wrote. “And protecting the free-exercise rights of corporations like Hobby Lobby, Conestoga and Mardel protects the religious liberty of the humans who own and control those companies.”

The minority opinion, written by Justice Ginsburg in dissent, argued that the contraceptive coverage mandate of the Affordable Care Act was essential to women’s health and reproductive freedom. More specifically, as a supporting brief from the Guttmacher Institute said, research shows that many women cannot currently afford the most effective means of birth control. With affordable access to contraceptive coverage, the law would reduce unintended pregnancies and abortions. The dissent further claimed that the 1993 religious-freedom law was not meant to apply to for-profit corporations.

“The court’s expansive notion of corporate personhood,” Ginsburg wrote, “invites for-profit entities to seek religion-based exemptions from regulations they deem offensive to their faiths.” Both she and Justice Sotomayor said the court’s decision “is bound to have untoward effects” in future cases regarding corporations’ religious freedoms. More specifically, Ginsburg expressed concern that other companies may now challenge the Affordable Care Act, citing religious objection to other medical services like blood transfusions or vaccinations. She also criticized the solution proposed by the majority.

The implications of the court’s decision fall into several categories. At the most basic level, the decision of the Supreme Court to allow for-profit companies to claim an exemption could impact a large number of Americans. According to The New York Times, a federal judge calculated that just a third of Americans are covered by insurance policies that will not be affected by this decision.

Small companies, employing fewer than 50 workers, need not offer coverage; religious employers are already exempt; and a number of plans that were grandfathered in are not required to offer the coverage. At a broader level, the decision will ignite a debate over religious and reproductive rights that will influence November’s congressional midterm elections.

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