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The Hobby Lobby Ruling May Not Be as Bad as It Seems—for Now

Getty Images/Chip Somodevilla

On Monday morning, the Supreme Court issued a major ruling the Hobby Lobby case, finding that closely held, for-profit corporations like the craft-store chain do not have to comply with the contraceptive mandate in the Affordable Care Act. But while the 5-4 ruling immediately infuriated liberals, the practical effects of it could be limited. Employees of closely held corporations may receive contraceptive coverage anyway.

That coverage would likely mimic the workaround developed in 2012 by the Department of Health and Humans Services. That regulation exempted nonprofit religious institutions like hospitals and charities (churches were already exempt) from adhering to the contraceptive mandate. However, it required insurance companies to offer contraceptive coverage free of charge to those employees. This workaround, the Obama administration argued, ensured that religious institutions were not directly participating in offering contraception to their employees.

In fact, this workaround is one of the reasons that the five conservative justices ruled in favor of Hobby Lobby. After holding that corporations have religious rights under the Religious Freedom Restoration Act, the Court then determined that while the federal government has a “compelling interest” in requiring contraceptive coverage, it has not done so in the “least restrictive means” possible. In other words, if the government can ensure contraceptive coverage in a way that places less of a burden on employers, it must do so. Alito writes that the federal government failed to do so here, because it could apply the same workaround to for-profit corporations that it applied to nonprofit religious institutions. (In this case, the narrow ruling only applied to closely held for-profit corporations, but did not rule out a similar application to all for-profits.)

“There are other ways in which Congress or HHS could equally ensure that every woman has cost-free access to the particular contraceptives at issue here and, indeed, to all FDA-approved contraceptives,” he writes in the 49-page opinion. “In fact, HHS has already devised and implemented a system that seeks to respect the religious liberty of religious nonprofit corporations while ensuring that employees of these entities have precisely the same access to all FDA-approved contraceptives as employees of companies whose owners have no religious objections to providing such coverage.” Alito also mentioned that the federal government could pay for the contraceptive coverage itself.

Herein lies the potential problem: Cost. When the Obama administration announced the workaround in 2012, a spokesperson for America's Health Insurance Plans (AHIP) said, "We are concerned about the precedent this proposed rule would set." AHIP may have similar reservations about covering the costs of similar regulation for closely held for profits. Those costs could be substantial: More than 90 percent of private sector companies are categorized as closely held and employ 52 percent of American workers. But the vast majority of them already provided contraceptive coverage pre-Obamacare. It's unclear how expensive it would be for insurers to provide free contraceptive coverage via the HHS workaround—or for the federal government to take on the costs itself. In his press conference Monday, press secretary Josh Earnest would not rule out new regulations from the administration, but instead pressed Congress to take action. But given the Republican opposition to the contraceptive mandate, there's little chance that lawmakers will pass new legislation to ensure all women have access to free contraceptive coverage. That leaves the administration with only unilateral options.

It’s unlikely that Hobby Lobby and other religious for-profit companies will be particularly happy with a similar HHS regulation. Many nonprofit religious institutions object to the workaround and have filed a lawsuit against it. Insurers, they argue, will just increase premiums in order to cover the free contraception, meaning that the religious institutions will be effectively paying for contraceptive coverage anyways. That case is making its way through the lower courts now—although the Supreme Court may have tipped its hand a bit in ruling that the workaround represented a less restrictive means to adhering to the contraceptive mandate. If that workaround were unconstitutional, as those challenging in court claim, presumably it wouldn’t be a less restrictive means to ensure that all women have access to free contraceptive coverage.

While the narrow ruling will likely allow HHS to apply the workaround to religious for-profit corporations, the implications of it may go further than that. Huffington Post reporter Paul Blumenthal asked on Twitter whether “Scientologist owned closely held corporation [could] refuse to cover mental health treatment for its employees.” Catherine Rampell, of the Washington Post, followed that up with questions over whether Christian Scientist–owned, closely held corporations must cover vaccinations, or Jehovah’s Witnesses–owned, closely held corporations must cover transfusions. Alito touches on this in his opinion when he explicitly writes that this ruling does not necessarily hold for immunizations or transfusions. “Other coverage requirements ... may involve different arguments about the least restrictive means of providing them,” he writes. Presumably, though, the same workaround to the contraceptive mandate could apply to immunizations or transfusions.

In 2012, few liberals realized the damage of the Supreme Court’s ruling that gave states the ability to opt out of the Medicaid expansion. They were sure that Republican states couldn’t pass up the billions of dollars in federal money that came along with expanding their Medicaid program. We now know the true damage of that ruling: Two years later, 24 states haven’t expanded their programs, denying insurance to millions of low-income Americans.

The same logic applies to the Hobby Lobby ruling. The immediate, practical implications of it could be limited because the administration—if it chooses—can provide a workaround to ensure that all women have access to free contraceptive coverage. But we don't yet know the decision's full implications, and that's unsettling.