Obamacare: What Happens if the Contraception Mandate Is Struck Down?

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The Affordable Care Act has brought the issue of religious freedom in modern-day America to the docket of the Supreme Court.

Almost immediately after President Barack Obama signed the Affordable Care Act into law in March 2010, dozens of lawsuits were filed. Fourteen state attorneys general filed lawsuits against the requirement that compels most Americans to purchase health insurance on the grounds that it was unconstitutional, but the Supreme Court ruled that the individual mandate was an acceptable exercise of Congress’s taxing power.

Meanwhile, lawsuits of another variety began to pile up, and in November, the Supreme Court agreed to examine another challenge to the constitutionality of the Affordable Care Act. When the nine-judge panel begins to hear oral arguments Tuesday morning, at issue will be the Obamacare requirement that companies subject to the employer mandate provide workers with policies covering contraception.

One of the purposes of the healthcare reform was to improve the quality of health insurance policies. To guarantee that insurers no longer offer so-called bare bones plans, the Affordable Care Act mandates that the policies provide 10 essential benefits, including mental health care and contraceptives. While ostensibly a sweeping attempt to ensure all Americans have access to the services they need without having to pay an unaffordable premium, religious groups have seen the mandated insurance coverage of contraceptives as a threat to religious freedom.

As many as 50 pending lawsuits have been filed in federal courts from various corporations challenging the healthcare reform’s mandated coverage of birth control services. In recent years, three federal appeals courts in Chicago, Denver, and Washington, D.C., have struck down the contraception coverage rule while two other appeal courts have upheld the provision.

The fact that there was a “circuit split” helped make the fight over contraception a case for the Supreme Court, although the court agreed to hear only two cases involving for-profit corporations: craft store chain Hobby Lobby Stores Inc. and Conestoga Wood Specialties Corp. Neither company has an issue providing insurance that covers most forms of birth control, but they are not willing to provide emergency contraceptives like Plan B or ella, or IUDs.

These two cases brought against Department of Health and Human ServicesSecretary Kathleen SebeliusSebelius v. Hobby Lobby and Conestoga Wood v. Sebelius — have far more significance for religious freedom in the United States than the success of the Affordable Care Act. The impact on the healthcare reform would be minimal if contraception coverage was not mandated.

Since the Supreme Court bases its rulings on the precedential application of laws in the past as well as its interpretation of legal doctrine, how the conservative-leaning court of Chief Justice John Roberts and previous courts have dealt with the issue of religious freedom is important. If the majority stands by precedent, it seems likely the Supreme Court will dispose of the two cases. United States v. Lee is a particularly important legal model.

Edwin Lee was a Pennsylvania Amish farmer and carpenter who contended that the federal payroll tax was a “burden” on his rights under the Free Exercise Clause of the First Amendment, which says that the government cannot place any restraint of the free exercise of religion.

His case argued that such a tax was “forbidden” by the Amish faith, and therefore its payment interfered with the exercise of his rights. But while the Court did rule that the tax violated his belief system, it unanimously held that “The broad public interest in maintaining a sound tax system is of such a high order, religious belief in conflict with the payment of taxes affords no basis for resisting the law.”

The opinion also said “when followers of a particular sect enter into commercial activity as a matter of choice the limits they accept on their own conduct as a matter of conscience and faith are not to be superimposed on the statutory schemes that are binding on others in that activity.”

The plaintiffs in the Supreme Court’s contraceptive cases have made similar arguments. Even though employers pay for the insurance program and not the pills themselves, and the use of contraceptives is a private medical decision, the plaintiffs stated in court briefs filed February 10 that the clause 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.

Not only did the Court decide in United States v. Lee that commercial activity limits the degree to which companies can use their religious beliefs as an excuse for refusing to comply with government law, other court rulings have gone so far as to knock down the “facilitate” argument. Previous decisions have determined that a company has suffered no injury — meaning it cannot bring a lawsuit — based on objections to how an employee spends his or her wages or other compensation, which includes insurance benefits.

While the Supreme Court has never attempted to argue that the Establishment Clause of the First Amendment prohibits tax support for religious organizations, several decisions made in the past 30 years added shades of gray, including the Roberts court’s 2011 decision to dismissed a case brought by Arizona taxpayers alleging that the state’s Tuition Tax Credit violated the Establishment Clause of the First Amendment.

That credit gave taxpayers a tax deduction for their donations to school tuition organizations that gave scholarships to students of particular faiths to attend certain religious schools. That rule may seem to set out a different precedent than 1981′s United States v. Lee, but it still allowed private citizens to guide the flow of their tax dollars. In essence, the tax credit was no different than public employees donating a portion of their wages to a religious organization, the court decided. The logic was that government funds were diverted to religious schools as the result of independent choice.

In both cases – Sebelius v. Hobby Lobby and Conestoga Wood v. Sebelius – the role of independent choice is at issue. The logic employed in case of Arizona taxpayers should hold in these cases, as well. The insurance benefits that Hobby Lobby and Conestoga contend violate religious freedom are a payment for their employees’ labor, just as are wages. The companies pay for the insurance policies, not the contraception or abortion drugs. Neither the government or the employers control how workers make use of their insurance policies; whether the policies are used for contraception is a matter of independent choice.

Of course, both plaintiffs would contend that the independent choice should be theirs to make. Writing in an op-ed for USA Today, Republican Rep. James Lankford of Oklahoma, who represents the district where the owners of Hobby Lobby live, and Tony Perkins — president of the Family Research Council, which filed an amicus brief in support of Hobby Lobby –  argued that business should not be “forced to violate their conscience as a condition for placing the sign, ‘Open for Business,’ on their front doors.”

But more important for the future of the healthcare reform is the upcoming challenge to the federal subsidies: the tax credits distributed to lower-income earners to subsidize the cost of insurance. On Tuesday, the Washington, D.C., Circuit Court of Appeals will hear oral arguments for Halbig v. Sebelius, in which a lower federal court in January upheld the Internal Revenue Service’s interpretation of the health care reform that Congress authorized individuals in states with federal-run exchanges to access premium subsidies.

Opponents of the Affordable Care Act claim that Congress never authorized those tax credits because lawmakers wanted to incentivize states to build their own marketplaces rather default to the federally facilitated exchange, an option only 14 states plus the District of Columbia chose. The text of the law passed in 2010 says that subsidies will be available only to people who enroll “through an Exchange established by the State.” In the case of Halbig v. Sebelius, the argument is that the federally facilitated exchange is not authorized to distribute subsidies because of that one line.

But District Court Judge Paul Friedman wrote in his January decision, which is under appeal: “The Court finds that the plain text of the statute, the statutory structure, and the statutory purpose make clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated Exchanges.”

While Halbig v. Sebelius involves no great questions of constitutional interpretation, as did the legal challenge of the individual mandate, it could significantly hamper the success of the reform. It may be a long-shot attempt to harness the reach of the Affordable Care Act, but if the 36 federal marketplaces are prohibited from subsidizing policies, exchange coverage would become unaffordable for many of the uninsured Americans the reform was trying to insure, especially those who consider themselves healthy.

That means those enrolling for exchange coverage would generally be sicker, driving up insurance costs and hampering the success of the reform. According to latest monthly enrollment report from the Department of Human Services, 85 percent of enrollees in federal exchange states have received federal subsidies.

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