The Tortured Path of Evading the Constitution

Nearly 150,000 formal public comments have been submitted by citizens, businesses, and organizations concerning the HHS regulation mandating free contraceptives, sterilization, and abortion-inducing drugs, more than on any other regulatory proposal on any subject government-wide, the Sunlight Foundation reports.

Most of the comments, due today, are critical of the highly-controversial proposed rule that would require employers and health plans to provide free access to what it calls “preventive health services.” Many employers – religious and secular – object to the mandate and argue it is a violation of their First Amendment right to freely exercise their religion.

The Obama administration first issued the rule in 2010 under authority it claimed through the health law. After a huge backlash, the administration proposed "accommodations" that would keep the mandate in place but avoid charges it is violating the constitutionally-protected religious liberty of those who object.

The administration's most recent attempt at an accommodation is begrudgingly narrow in scope, inadequate, and unworkable. Its key provision turns on an undefined term to be applied by government officials without using clear standards.

A narrowly constricted category of "religious employers" would be exempt from the mandate – basically covering churches and religious orders. Under the narrow definition, an organization is a "religious employer" if (among other requirements) it is a non-profit organization and falls within the terms of Section 6033(a)(3)(A)(i) or (iii) of the tax code. Hospitals and universities in almost all cases would not qualify.

In addition, the proposed rule says other "religious organizations" could be exempt, but the term is never clearly defined, giving government bureaucrats broad discretion to determine who would qualify (and providing ample space for political favoritism).

These undefined "religious organizations" could be exempt from the mandate through a baroque mechanism intended to give the impression that they are not responsible for providing or paying for the coverage to which they object.

No "accommodation" is offered to businesses or for-profit organizations, regardless of their religious objections to the mandate. Nor does the administration provide a vehicle for accommodation to self-insured businesses, even if they are religious employers or organizations.

To be an eligible for an accommodation, an employer must be a not-for-profit organization that "holds itself out as a religious organization." But this term is not defined. It is not clear, therefore, whether a university or a hospital founded and based on religious principles but which provides education, research, and health care would qualify as a "religious organization."

To trigger the accommodation, the employer must certify to its insurer that it holds itself out as a religious organization and that it has a religious objection to providing the mandated contraceptive coverage.

The insurer then is required "automatically" to provide separate, individual coverage for those services, without premium and without copayment, to each worker (and dependent) covered by the employer's health plan. Neither the religious organization nor the worker can be charged for the coverage.
The regulations purport to insulate an employer from paying for the coverage since the insurance carrier cannot charge the employer or the employee for the contraception coverage. But the scheme is unlikely to satisfy the moral objections of religious organizations.

The employer still is facilitating the insurance since the requirement imposed on the insurance company kicks in only when the employer has purchased insurance. By obtaining insurance for its employees, the religious organization is setting in motion a process that results in the coverage to which it has moral objections, even if it is not (knowingly) paying for it.

And the scheme is not likely to work as a practical matter either. The insurance company that provides the employer's health plan will have to create a new product – a policy that does nothing except cover contraception services without premium or copayment.

Will this happen? And does the federal government have authority to require an insurance company to create a new product and provide this coverage at no charge?

And how is the coverage to be paid for, since the insurer cannot bill either the beneficiary or the employer? HHS believes the contraceptive coverage has no net cost because it reduces other health expenses, but it does nonetheless attempt to provide a mechanism.

All of the accommodations offered by HHS require the third party administrator (assuming there is one) to find and then arrange with an insurance company to provide the contraception-only insurance. The proposed regulations provide an elaborate scheme to compensate the insurer for the cost of the coverage, plus a margin. The insurer would tell HHS its cost for the coverage. If HHS approves this cost estimate, the insurer would receive an adjustment to the user fees the insurer must pay to participate in the new health insurance exchanges and then hand over a portion of this adjustment to any third party administrator to compensate it for its costs.

It is unclear why an insurer would find it worthwhile to get into this limited business, and what happens when the third-party administrator cannot find an accommodating insurer.

If, as may prove to be the case, the federal government does not have authority to impose the user fee, this funding mechanism would fail at the outset. Even if valid, it is very difficult to see how the excruciating complexities of this exercise would work.

Finally, the administration has not figured out how to "accommodate" self-insured religious organizations. For these companies which pay the great majority of their employees’ medical bills directly, there is no insurer on which to pin the obligation to provide free contraception coverage. The administration discusses different ways of requiring the third party administrator of the self-insured plan (if there is one) to find an insurance company willing to write a contraception-only policy for individual employees. But it does not propose any specific mechanism.

This tortured regulation attempting to find an accommodation to the HHS mandate shows the extraordinary difficulty – nigh, impossibility – of attempting to go around the constitutionally-protected right to religious liberty.

The administration's fixation on using employer-sponsored health insurance as a lever to provide free contraception coverage conflicts directly with the conscience of many of those employers. The administration may try various tweaked versions of an "accommodation," but they are unlikely to work as a practical matter or be acceptable to employers with religious objections. This stark example of government power versus the constitutionally-protected exercise of religion will not be resolved easily.