Three Problems with the Hobby Lobby Exemption

by vaughn_admin  //  

June 16, 2016

The Supreme Court will come to a decision in Sibelius v. Hobby Lobby by the end of June. Given the oral arguments and what we know about the justices, how is the court likely to reason on the religious freedom aspects of this case?

By: Frederick Mark Gedicks

By now it might seem that there can’t possibly be anything new to say about Sebelius v. Hobby Lobby, the so-called “contraception mandate” case under the Affordable Care Act now pending before the Supreme Court. But there is. Oral argument exposed three serious difficulties in Hobby Lobby’s challenge to the mandate which the Court will have to address if it decides the case in Hobby Lobby’s favor.

1. “I shouldn’t have to pay extra to practice my religion (but it’s okay if my employees pay it for me).”

As Professor Lederman has shown, the ACA regulations do not create a legal requirement that employer health plans cover FDA-approved contraceptives and related services. The regulations provide that if an employer offers a health plan to its employees, that plan must cover contraceptives. Employers with more than 50 employees who fail to offer a health plan must pay an annual tax of $2,000 per employee; their employees are eligible to purchase health insurance directly on the federal or state ACA exchanges (with qualifying subsidies).

$2,000 per employee is obviously far less than any employer’s annual cost of providing health insurance to its employees and their covered dependents. Hobby Lobby, therefore, could avoid providing the contraceptives to which it objects by eliminating its health insurance plan and paying the “no-plan tax” for each of its roughly 13,000 employees, who instead would purchase health insurance on the exchanges. $26 million is obviously a lot of money, but it is surely dwarfed by the expenses Hobby Lobby currently incurs to maintain a health insurance plan for 13,000 employees and their many dependents.

At oral argument, however, Hobby Lobby’s counsel complained bitterly at the unfairness of suggesting that Hobby Lobby could both honor its religious beliefs and comply with the mandate by eliminating its health insurance plan and paying the no-plan tax. Hobby Lobby would not only have to pay the tax, he insisted, it would also have to increase wages to attract employees in the absence of a health insurance benefit. This would increase its cost of doing business and that, apparently, is just not right. (See Trans. Oral Arg. 27-29.)

It is well-documented that excusing Hobby Lobby from covering approved contraceptives in its health plan would impose significant out-of-pocket costs on its employees, who would then have to pay for the excluded contraceptives with after-tax wages instead of having them fully covered by insurance. Such expenses can be substantial. The $1,000 up-front cost of an intra-uterine device—the most effective form of contraception, and one to which Hobby Lobby objects—is a serious financial obstacle to Hobby Lobby’s mostly low-wage employees.

So, it is apparently unfair for a multi-billion dollar corporation like Hobby Lobby to bear increased costs for practicing its religion, but not unfair at all for it to shift those costs onto lower-income employees and dependents who believe and practice differently. How much credence, really, should the Court give to such a patently calloused claim?

2. “The government can’t satisfy strict scrutiny here (but it easily can everywhere else).”

The Religious Freedom Restoration Act provides that believers must be excused from obeying federal laws that impose a “substantial burden” on their religious exercise, unless the government satisfies strict scrutiny by proving that the burden is the “least restrictive means” of furthering a “compelling government interest” (42 U.S.C. § 2000bb-1). Hobby Lobby argues that the contraception mandate cannot possibly satisfy this test. Yet at oral argument, its counsel dismissed suggestions that exempting Hobby Lobby from the mandate would open the floodgates to RFRA exemptions from other important government laws. The Court need not worry about exemptions from child vaccination requirements, minimum wage laws, payment of social security and other taxes, or myriad other laws regulating public health, the for-profit workplace, or access to benefits—all of these, counsel assured the Court, are necessary to the advancement of compelling government goals and thus would never be subjected to exemptions like the one sought by Hobby Lobby. (See Trans. Oral Arg. 6, 15, 21, 44, 85.)

But, if the compelling-interest test is so hard to satisfy in Hobby Lobby’s case, why is it so easy to satisfy in every other case the justices could think of? Or, more to the point, if vaccinations, minimum wages, and social security pensions are so obviously the least restrictive means of advancing compelling government interests in protecting public health, avoiding worker exploitation, and ensuring subsistence incomes for the elderly, why isn’t the mandate the least restrictive means of furthering the compelling goals of promoting women’s health and their equality in the workplace?

The compelling-interest test that Hobby Lobby seeks to apply to the mandate must be the same test that applies to every other federal statute or regulation from which for-profit businesses and owners might seek exemption under RFRA. Its counsel’s assurances cannot mask that an exemption for Hobby Lobby would have extraordinary consequences, requiring the government to prove that important federal laws providing critical benefits and protections must satisfy the rigorous standard of strict scrutiny whenever applied to objecting believers.

3. “The government can pay (but my political allies will walk barefoot over broken glass to keep this from happening).”

For many years, the federal Title X program has subsidized distribution of a limited amount of contraceptives to lower-income women through Planned Parenthood and other family planning organizations. At oral argument Hobby Lobby’s counsel repeatedly invoked Title X as a less restrictive alternative, suggesting that Hobby Lobby employees could simply get all the disputed contraceptives from Title X organizations (Trans. Oral Arg. 38, 40, 84, 86).

It is not clear that counsel’s argument is factually sound, given Title X constraints. The program does not provide all forms of contraception, the supply of contraceptives its funding permits is limited, and it generally serves only lower-income women. It is doubtful, therefore, that Title X could pick up the slack if the health care plans of Hobby Lobby and other for-profit businesses were exempted from covering some or all contraceptives.

But more importantly, the amici supporting Hobby Lobby before the Supreme Court consist largely of conservative Republican members of Congress, Roman Catholic and evangelical Protestant clerics, theologians, and academics, and conservative think-tanks and public-interest firms. This is not, shall we say, a coalition
likely to support an increase in Title X funding. To the contrary, many of these people and organizations have long been dedicated to reducing or even eliminating it.

This political reality is a stark reminder that despite whatever lawyers might conjure up as hypothetical alternatives, in the real world where women actually live, Congress is not going to increase Title X funding and may even reduce it. Recognizing Title X funding as a less restrictive alternative, therefore, would leave the government unable to advance its compelling goals of protecting women’s health and enhancing workplace equality among employees and covered dependents of Hobby Lobby and all other exempted for-profit businesses. 

A RFRA exemption for Hobby Lobby’s health insurance plan would require the Supreme Court to confront and resolve these problems in Hobby Lobby’s argument. Each of them should give pause to anyone inclined to grant Hobby Lobby an exemption, and together they should lead the Court to reject exemption altogether, because it would impose the costs of practicing Hobby Lobby’s religion on its employees and their dependents and furthermore threaten the normal operation of federal law.

Frederick Mark Gedicks is Guy Anderson Chair and Professor of Law at the J. Reuben Clark Law School of Brigham Young University. 

This piece was originally authored on June 11, 2014 for the Religious Freedom Project at Georgetown’s Berkley Center for Religion, Peace, and World Affairs. 

EDITOR’S NOTE: The views and opinions expressed are solely those of the author and do not represent Brigham Young University.