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Supreme Court ruling allows religious beliefs to trump birth control mandate

Narrow ruling affects only private employers


Now that the U.S. Supreme Court says the federal government cannot force closely-held private employers to directly provide prescription contraceptive coverage, it remains to be seen if the Obama administration will propose new regulations to close this coverage gap.

The 5-4 ruling last week struck down a health care reform law regulation from which three Christian family-owned companies argued they should be exempt because of their owners’ religious objections to providing employees cost-free prescription contraceptives and related services.

The ruling applies only to family-owned private companies, and does not exclude publicly held corporations from the requirement to offer employees coverage for contraceptives.

The mandate violates privately- held corporations’ rights under the 1993 federal Religious Freedom Restoration Act, which bars the government from actions that substantially burden the free exercise of religious beliefs, the high court ruled.

“The plain terms of RFRA make it perfectly clear that Congress did not discriminate this way against men and women who wish to run their businesses as for-profit corporations in the manner required by their religious beliefs,” the court ruled, siding with Hobby Lobby Stores Inc., Mardel Inc. and Conestoga Wood Specialties Corp. “Protecting the free-exercise rights of closely held corporations thus protects the religious liberty of the humans who own and control them.”

The court, though, did suggest a way — one embedded in Department of Health and Human Services regulations — in which contraceptives could be provided without violating the 1993 law.

That approach would have an employer’s third-party administrator obtain contraceptives at no cost to the employer, an option the government already extends to nonprofit organizations with religious objections to prescription contraceptives.

“The court seems to be telling regulators what to do,” in drafting new rules that will pass legal muster, said Sharon Cohen, a principal at Buck Consultants L.L.C. in Washington.

The Obama administration declined to discuss its next step.

“Frankly, we’re still assessing the decision and its legal implications So, as we gather some information, we may be in a position to better consider the range of options that are available to the president,” White House Press Secretary Josh Earnest said last week in a briefing after the court’s ruling.

Some think the Obama administration will propose new coverage rules for privately held companies directly affected by the ruling.

“The White House may feel compelled to come up with an approach to fill the coverage gap” established by the Supreme Court ruling, said Amy Bergner, a managing director at PricewaterhouseCoopers L.L.P. in Washington.

But the approach suggested by the Supreme Court also is under attack. Numerous nonprofit religious-affiliated organizations have sued to challenge providing cost-free prescription contraceptives through a TPA. Those suits, filed in various federal courts, still are pending.

“We are certainly not done with the litigation,” over the prescription contraceptive coverage issue, said J.D. Piro, a senior vice president at Aon Hewitt in Norwalk, Connecticut.

Publicly-held employers, have stayed out of the fray. For them, covering prescription contraceptives is a mainstream benefit. A 2011 Mercer L.L.C. survey of 779 employers found nearly 90% offered prescription contraceptive coverage.

Benefits experts doubt large employers would test the legal waters and drop the coverage.

“Generally speaking, there doesn’t seem to be a high level of noise for not providing coverage,’’ said David Dross, managed pharmacy practice leader in Mercer’s Houston office, adding that dropping the coverage would not be “a cost saver and it could hurt employee relations.”

“It would be very hard for a publicly-held firm to do this. It is not just what the CEO thinks,’’ Buck Consultants’ Ms. Cohen said. “You need a consensus there and there are shareholders to consider as well. In the real world, exclusion of prescription contraceptive coverage would not be practical or very likely.”

The Supreme Court also was skeptical that large publicly-held employers would try to exclude prescription contraceptive coverage.

“The idea that unrelated shareholders — including institutional investors with their own set of stakeholders — would agree to run a corporation under the same religious beliefs seems improbable,” the justices said in their written opinion.