I’ve spent the last two evenings reading the text of Burwell v Hobby Lobby. That might sound dull, but I highly recommend it – far more interesting than the text of the ACA or the thousands of pages of associated federal regulations that have been released to supplement it. It’s 95 pages, but it’s a relatively quick read. For the most part, the Burwell v Hobby Lobby ruling is all in plain English and easy to understand (although unless you’ve got a good law background, you’re going to end up Googling a lot of previous lawsuits, rulings, and laws that are referenced throughout the text). And there’s also lots of drama – the majority and the dissent take shots at each other throughout the ruling, and it makes for a very interesting read. Somehow I doubt that the whole court went and had a friendly lunch together after this ruling was handed down…
Anyway, several things stood out to me as I was reading the text of Burwell v Hobby Lobby, and I thought I’d address them here. The first issue that this brings into focus is a reminder of how strange it is that we have normalized employer-sponsored health insurance so thoroughly in our culture. This “accident of history” dates back seven decades, and is something that most working Americans take for granted (the majority of insured, non-elderly Americans get their health insurance from an employer). But it makes little sense, especially in our 21st century world where people change jobs far more than we did a few generations ago. Would it seem odd if all of a sudden your employer were selecting your homeowner’s or renter’s insurance for you, and the type and quality of coverage you received was determined based on your employment? Of course it would. But what if it had just “always been that way” and you’d grown up with employer-sponsored homeowner’s/renter’s insurance? That’s basically the scenario we have with employer-sponsored health insurance, and it’s so entrenched that a lot of people don’t notice how odd – and inconvenient in the face of job changes – it really is. The Burwell v Hobby Lobby case is an excellent reminder that there are serious drawbacks to the employer-sponsored model of health insurance… in this case, the fact that the employer is the one making the primary decisions regarding coverage. The ACA has added a broad range of consumer protections, but this court case illustrates the fact that employers still have leeway to dictate the terms of their employees’ coverage in ways that might not be beneficial to employees. The obvious solution is individual health insurance (just the way we purchase our own auto and homeowner’s/renter’s coverage), and the ACA’s guaranteed issue provision and tax credits have made that a much more feasible solution than it was prior to 2014.
Burwell v Hobby Lobby Summary
But I also wanted to highlight a few of the more interesting points from the Burwell v Hobby Lobby ruling. Here’s a summary of the case in a nutshell: Hobby Lobby (owned by the Greens, a Christian family), Conestoga (a woodworking company based in PN and owned by the Hahns, a Mennonite 
family) and Mardel (a Christian bookstore owned by the Green family) are opposed to four of the 20 FDA-approved contraceptives that are included in the ACA’s contraceptive mandate. The law requires health plans to cover all FDA-approved contraceptives for women, but the families who own these companies object to “morning after” pills (Ella and Plan B) and to IUDs. They claim that these methods of birth control have the effect of preventing a fertilized egg from implanting in the uterus, and they thus consider them to be abortifaciets (Web MD explains how IUDs work here, how Ella and Plan B work here). Their position was that the requirement to cover these four contraceptives under their self-insured group health plan was a “substantial burden” under RFRA (Religious Freedom Restoration Act of 1993), and the Court had to determine whether or not the contraceptive mandate is “in furtherance of a compelling government interest” and if so, whether it’s the “least restrictive means for furthering that interest.”
SCOTUS sided in a 5-4 decision with the plaintiffs, ruling that they do not have to include those four methods of contraception in their employer-sponsored health plan, and offering two alternatives that they consider to be less-restrictive of the Greens’ and Hahns’ religious freedom under RFRA: Having the government pay for them instead, or letting these “closely held” corporations receive the same exemption that churches and religious not-for-profit corporations can use, whereby the insurer or third-party administrator provides the contraceptives instead, at no cost or administrative burden to the corporation. The majority opinion for Burwell v Hobby Lobby was written by Justice Alito, with additional commentary by Justice Kennedy, and the dissent was written by Justice Ginsburg.
- On page 11, Justice Alito notes that “the contraceptive mandate ‘presently does not apply to tens of millions of people’… attributable, in large part, to grandfathered health plans” and “employees working for firms that do not have to provide insurance at all because they employ fewer than 50 employees”. That might sound good at first pass, but let’s take a closer look. In her dissent, on page 27, Ginsburg point out that grandfathered plans are steadily disappearing, and that “far from ranking as a categorical exemption, the grandfathering provision is ‘temporary, intended to be a means for gradually transitioning employers into mandatory coverage’.” And what about people who work for firms that aren’t required to provide health insurance because they have fewer than 50 employees? That’s true of course. But if those employers DO provide small group health insurance, it has to include preventive care (including contraceptives) with no cost-sharing. And if those workers instead seek health insurance in the individual market (on or off-exchange), those plans also must comply with the ACA’s preventive care mandate, including contraceptive coverage. I would say that Justice Alito’s remarks make it seem like the contraceptive mandate is less wide-spread than it actually is. It’s true that grandfathered plans don’t have to comply, but those are rapidly going away. Other than specifically-exempted churches and religious non-profits, all new group (and individual) health plans that have been purchased since March of 2010 have to cover the full range of FDA-approved contraceptives.
- On page 41 of the majority’s decision, Justice Alito suggests that a good solution would be to just have the government (ie, taxpayers) foot the bill for the contraceptives that Hobby Lobby, Conestoga and Mardel find offensive. That is a bit of a scary proposition when you really think about it. Of course, corporations very rarely try to weasel their way out of spending money, but bear with me here. What if every once in a while, one did? And what if the solution was just “let the government pay for it!” Ginsburg addresses this issue in her dissent as well, by the way. In discussing this issue, Justice Alito references HHS briefs that have estimated no net cost to insurers and corporation (or even a savings) for providing preventive care (including the full range of FDA-approved contraceptives) with no cost-sharing requirement for insureds. This is because the cost of the preventive care and contraceptives is offset by savings in pregnancy-related care and complications. However, if the government (remember, that means all of us) picks up the tab, the associated cost-savings that result from fewer unintended pregnancies is enjoyed by the corporation (especially in Hobby Lobby’s case, since they’re self-insured), while the cost of the contraceptives – including IUDs, which are among the most effective contraceptives, but also among the most expensive – is borne by the taxpayers.
- The footnote on page 2 of the Burwell v Hobby Lobby dissent is a Really Big Deal as far as I’m concerned. It’s written by the majority, and states that with regards to the alternative that churches and not-for-profit religious organizations currently have (to let the insurer or third-party administrator pay for the contraceptives), “In the end, however, the Court is not so sure. In stark contrast to the Court’s initial emphasis on this accommodation, it ultimately declines to decide whether the highlighted accommodation is even lawful.” Throughout the majority’s decision, this alternative is offered as a valid solution for companies like Hobby Lobby. But this footnote makes one ponder the eventual outcome of the lawsuits that are wending their way through the courts, almost certain to end up in SCOTUS by next term. There are churches and religious not-for-profit companies that aren’t happy even with the accommodation that the Obama Administration provided, and they’re fighting against it. That sentence buried in a footnote in the dissent indicates that the issue is by no means closed… next year we might find out that the Court settles on just one alternative (let the government pay for it) instead of two.
- On page 13 of the dissent, Ginsburg asks “Do for-profit corporations rank among “person[s]” who “exercise… religion”?” Excellent point, Justice. I am not anti-corporation (although I reject the notion that corporations are people). Jay and I incorporated our brokerage nearly a decade ago, and we’re well aware of the benefits incorporation confers. One of them is pointed out by Justice Ginsburg on page 19 of her dissent: “By incorporating a business, however, an individual separates herself from the entity and escapes personal responsibility for the entity’s obligations.” Justice Ginsburg goes on to wonder why this benefit should only be considered when it serves to further the interests of the corporation’s owners. In this case, incorporation seems like the perfect explanation for why the Greens and the Hahns don’t have legal standing: Their corporations are separate from themselves (as opposed to sole proprietorships, for example); they can continue to hold their sincere religious beliefs, separate from the requirement that their corporation follow the law as written.
- Throughout the Burwell v Hobby Lobby majority opinion, Justice Alito frequently questions why not-for-profit corporations should be given different status than for-profit corporations, noting on several occasions that both should be eligible for same accommodations that the Obama Administration has provided for not-for-profits (although, as noted above, it remains to be seen whether or not the Court will find that accommodation to be legal). In the dissent, Justice Ginsburg points out that the accommodation is only for churches and religious not-for-profits, and that there is indeed a significant difference between those entities and for-profit corporations. One major distinction is noted in footnote 15 on page 15 of the Burwell v Hobby Lobby dissent: Religious organizations are allowed to discriminate based on religion when hiring. Secular for-profit corporations are not, even if their owners are devoutly religious. Justice Ginsburg writes that “it can scarcely be maintained that RFRA enlarges these exemptions to allow Hobby Lobby and Conestoga to hire only persons who share the religious beliefs of the Greens or Hahns.” Later in the dissent (page 18), Ginsburg again calls out the majority’s conflation of for-profits and religious not-for-profits: “Again, the Court forgets that religious organizations exist to serve a community of believers. For-profit corporations do not fit that bill.” Regardless of the majority’s talk of charitable contributions, religious undertones in company mission statements, and alternative reasons for incorporating (including the ability to lobby for legislation and campaign for political candidates, see page 24 of the Court’s decision), for-profit corporations exist primarily to make a profit.
- Justice Ginsburg’s dissent is excellent. Even if you don’t read the whole ruling, read the last 35 pages. She sums it up with such a logical conclusion: “The Court, I fear, has ventured into a minefield by its immoderate reading of RFRA. I would confine religious exemptions under that Act to organizations formed “for a religious purpose,” “engage[d] primarily in carrying out that religious purpose,” and not “engaged…. substantially in the exchange of goods or services for money beyond nominal amounts.” Very clear, very concise, very level-headed. And yet ultimately the Court sided with the idea that people should be able to get fabulously wealthy thanks to their employees… and yet not have to foot the bill for preventive care that those employees are entitled to under the ACA. Because, of course… we taxpayers should foot the bill instead!
The Court does make it clear that the Burwell v Hobby Lobby ruling applies only to closely-held corporations, and that it applies only to the contraceptive mandate – ie, it should not be construed as an invitation for other for-profit corporations to look for religious exemptions to mandates that they believe are at odds with religious tenants (or maybe just expensive?). But the Burwell v Hobby Lobby ruling will set a precedent for lower courts in a variety of cases, no doubt with further reach than just the ACA’s contraceptive mandate.
I don’t personally have a dog in this fight. We have individual health insurance, and even though we haven’t yet switched to a fully ACA-compliant plan (our pre-2014 plan was allowed to renew at the end of last year, and will do so again at the end of this year), our plan has been complying with the Women’s Preventive Services guidelines for nearly two years (effective August 1, 2012). No third party selects our coverage for us – if we want to change to a new plan during open enrollment, we’re free to choose from among the many options that are available in the individual market in Colorado. As I noted at the top, the SCOTUS decision on Burwell v Hobby Lobby is a good example of how individual insurance (especially now that all of the ACA’s consumer protections are in place) trumps employer-sponsored insurance.
