Hobby Lobby decision creates controversy about contraception, Obamacare

Under the decision, many closely held corporations do not have to pay for birth control of employees if offering it violates the owners’ religious beliefs

The Burwell vs. Hobby Lobby Stores, Inc. case, which was narrowly decided by the U.S. Supreme Court, has led to a lot of controversy.

Those who support conservative religious values champion the recently released decision, but pro-choice advocates were critical of the 5-4 ruling.

Under the decision, many closely held corporations now do not have to pay for birth control of employees if offering it violates the owners’ religious beliefs.

The majority opinion, written by Justice Samuel Alito, said certain healthcare regulations violate the Religious Freedom Restoration Act (RFRA), which “prohibits the Federal Government from taking any action that substantially burdens the exercise of religion unless the action constitutes the least restrictive means of serving a compelling government interest.”

The decision apparently relates to many closely held, for-profit businesses, which, prior to the ruling, likely would have been required under Obamacare, more formally known as the Affordable Care Act, to provide varied forms of contraception to employees.

 

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“It could be something that impacts a lot of employers in America,” Steve Friedman, co-chair of the Employee Benefits Practice Group at Littler Mendelson, said in an interview.

Yet, he urged that employers be “cautious” in reading too much into the decision. For instance, it does not give blatant approval to other types of religious objections.

Some say the decision could be just the tip of the iceberg and many other objections may be forthcoming to avoid other requirements under Obamacare, sources told InsideCounsel.

But those jumping on the Hobby Lobby decision bandwagon may have limited ability to get their arguments approved by the nation’s court system. Some, no doubt, still will likely try to expand the scope of the Hobby Lobby decision.

Already, giving corporations some of the same rights as human beings on the issue of contraceptives and healthcare has been criticized by several liberal justices.

For example, Justice Ruth Bader Ginsburg said in her dissenting opinion, “Religious organizations exist to foster the interests of persons subscribing to the same religious faith. Not so of for-profit corporations. Workers who sustain the operations of those corporations commonly are not drawn from one religious community. Indeed, by law, no religion-based criterion can restrict the work force of for-profit corporations.”

It is noteworthy that the issue of whether corporations have many of the same rights as people was addressed in the Citizens United case, too, according to InsideCounsel.

 

NEXT PAGE: Fallout from the decision

However, the Hobby Lobby decision does not impact the non-profit religious sector. Two years ago, a compromise was negotiated, so religious-based schools, religious hospitals and non-profits were able to avoid providing contraception coverage under Obamacare.

The White House is likely looking for workarounds to the Hobby Lobby decision. "We will work with Congress to make sure that any women affected by this decision will still have the same coverage of vital health services as everyone else," White House Press Secretary Josh Earnest said.

On the other hand, Adele Keim, counsel at The Becket Fund for Religious Liberty, which represented Hobby Lobby, said, "Today is a great day for religious liberty," Fox News reported.

Still, it is possible that the Hobby Lobby decision is just one piece of a continuing effort to dismantle Obamacare regulations.

Edward Buthusiem, a former general counsel at GlaxoSmithKline, who now works at Berkeley Research Group, said general counsel at smaller companies will likely pay close attention to the Hobby Lobby decision, and may likely have to explain its limitations to owners or directors.

“This is the biggest decision made about Obamacare since the law was upheld in 2012,” Buthusiem added in an interview.

It would be difficult to use the Hobby Lobby decision at a publicly traded company, because there are so many owners, because of the presence of shareholders, with diverse religious beliefs, Buthusiem said. Yet, it is possible such issues may be articulated at shareholder meetings by activist shareowners. Companies need to be ready for such arguments.

Under IRS rules quoted by The Washington Post closely held businesses are those where more than 50 percent of the value of outstanding stock is owned directly or indirectly by five or fewer individuals at any time during the last half of the tax year. Nor, can it be a personal service corporation.

It may describe at least 90 percent of all U.S. businesses, according to a 2000 study cited by The Post. In addition, closely held corporations employed 52 percent of the American workforce, the report adds.

Just how many businesses may be impacted by the Hobby Lobby case? Note that some 85 percent of large employers already offered contraception coverage before it was mandated under Obamacare. Also, 96 percent of small businesses do not have to abide by the contraception mandate because they have fewer than 50 full-time employees, The Post said. 

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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