Can a Corporation’s Religion Exempt it From Obamacare?

How can a corporation exercise religion?

Justice Sonia Sotomayor posed that question Tuesday, March 25th at the Supreme Court hearing on the Obamacare contraception mandate. (See my news report on the case in the Inquirer.)  Two private for-profit companies, Conestoga Wood Products based in Lancaster County, PA and Hobby Lobby Stores based in Oklahoma City, OK, claim their corporate religious beliefs would be violated by complying with the rule.  Justice Sotomayor wondered if they can actually have any.

Justice Elena Kagan asked how far corporations could go in the name of religion.  Could they refuse to cover vaccines or blood transfusions for their employees?

The conservative justices, needless to say, saw it differently.  Their concern was whether a religiously oriented corporation would have any recourse if the government tried to restrict its mission.  Justice Samuel Alito worried that kosher and hallal butcher shops would have no way to challenge a hypothetical government effort to close them.  Justice Anthony Kennedy wondered whether the government could force private businesses to cover abortions.  (For a full transcript of the oral arguments, click here.)

The issue is important for Obamacare but not central to its functioning as the issue had been in the Court’s 2012 decision.  In that case, the challengers sought to invalidate the law’s mandate that all individuals maintain health insurance.  Without that requirement, the exchange marketplaces where individuals buy coverage could face financial collapse caused by healthy people choosing to stay out of the risk pool.

The question posed at the Supreme Court hearing was whether health plans offered by employers must include coverage for all contraceptives.  The law requires coverage for preventive services that are approved by a government board, and contraception is one of them.  The plaintiffs specifically object to covering four contraceptive methods, which they believe impede the implantation of a fertilized egg, something they liken to inducing an abortion.  If employers were permitted to opt out of covering these methods for religious reasons, the burden on many female employees would be clear, but the Act’s overall structure would remain intact.

However, the underlying issue has implications that reach will beyond Obamacare.  If corporations have a constitutional right to practice a religion, how far can they go in asserting it?  Could they ignore rules that prohibit discrimination against gays, as the Arizona legislature sought to permit in a bill that was ultimately vetoed.  Could they ignore fire codes in maintaining the buildings they own?  Could they force employees to attend religious services?

And who would decide which faith a corporation practices?  Would shareholders vote as they do for the board of directors or corporate accounting firm?  Could the religion change in response to a shareholder proxy battle?  How would directors and officers resolve differences between their personal religious beliefs and those of the corporation they serve?

To avoid questions like these, many observers expect the Court, if it upholds corporate religious rights, to do so narrowly.  Justice John Roberts signaled as much by suggesting that a holding could be limited to companies that are closely held, in other words, not publicly traded.  The Court could also base its decision on a 1993 statute that protects religious practices, the Religious Freedom Restoration Act, rather than on the Constitution, itself.  Such a ruling would recognize a conflict between two acts of Congress, that law and Obamacare, without addressing more fundamental constitutional concerns.

But a narrow ruling could have unintended consequences.  The religious liberty law requires that the government show a “compelling interest” when it infringes on religious observances, a standard that can be difficult to meet.  Other companies might see this as an opportunity to test the judicial waters for a host of religious exemption claims involving not just Obamacare but a range of other laws.  We might, in the words of Justice Kagan, “see religious objectors come out of the woodwork with respect to all of these laws.” 

Of course, if the Court were to rule against corporate religious rights, it would also have to tread carefully.  It must still insure that religious rights of individuals are protected.  However, individual rights raise different issues from corporate rights.

The tenor of the questioning suggested that Justice Anthony Kennedy may hold the key to the outcome.  The tough questions he asked of both sides suggest he will cast the swing vote, as he has so many other times.  A lot more than Obamacare will be at stake as he swings.

A decision is expected in June, and it will be greeted with tremendous anticipation.  Obamacare has never been short on drama.