As the Obama administration enters its final days, one issue that it needed to wrap up was its response to the Supreme Court in the Zubik contraceptive coverage litigation. On January 9, 2017, the administration checked that off its list by announcing that it was not modifying its current accommodation for employers that object to contraceptive coverage on religious grounds.
By way of a quick recap, the Affordable Care Act requires insurers and self-insured health plans to cover women’s preventive health services, as identified by the Health Resources and Services Administration (HRSA), without cost sharing. In 2011, pursuant to recommendations from HRSA which were based in turn on recommendations from the Institute of Medicine (now National Academy of Medicine), the administration adopted a rule requiring insurers and self-insured employers to cover all FDA-approved contraceptives.
Recognizing that a number of religious organizations objected to the use of all or some contraceptives, the rule contained an exception for “religious organizations” such as churches, which were absolutely exempt from the requirement. The administration subsequently created a further accommodation for entities like universities, hospitals, or charities operated by religious groups that object to contraceptives, but which are likely to employ women who use contraceptives.
Under this second accommodation, the entities must either notify their insurer or plan administrator, or the Department of Health and Human Services, of their objection, after which it becomes the responsibility of the insurer or plan administrator to provide contraceptive coverage without any further involvement or payment from the entity. Following the Supreme Court’s decision in Hobby Lobby v. Burwell, the administration extended this accommodation to closely held for-profit corporations whose owners object to contraceptive coverage for religious reasons.
The accommodation offered by the administration was not, however, acceptable to a number of religious entities, which sued claiming that the accommodation violated the Religious Freedom Restoration Act (RFRA). RFRA prohibits federal government regulations from substantially burdening the exercise of religion unless the regulation is the least restrictive means to accomplish a compelling governmental interest. Nine of the federal appellate courts that ruled on lawsuits brought by these organizations held that the accommodation did not substantially burden the exercise of religion and several held that it was the least restrictive means of accomplishing a compelling governmental interest; however, one appellate court held that the accommodation violated RFRA, creating a split among the circuits.
In the spring of 2016, the Supreme Court heard the appeal of the religious entity challengers in Zubik v. Burwell. After oral arguments, the Supreme Court (which consisted of only eight justices following the death of Antonin Scalia and the refusal of the Senate to confirm his replacement) ordered the parties to brief the question of whether contraceptive coverage could be provided through the insurers of religious entities without the entities having to submit the notices to which they objected.
In May the Supreme Court, likely split four to four on the merits and hoping for compromise, remanded the cases to the lower courts for,
. . . an opportunity to arrive at an approach going forward that accommodates petitioners’ religious exercise while at the same time ensuring that women covered by petitioners’ health plans “receive full and equal health coverage, including contraceptive coverage.”
In July, the administration published a “request for information” seeking input from interested parties as to whether a resolution of the dispute was possible that would meet the objections of the religious entities but still ensure women’s access to health care. The administration received over 54,000 comments from the public responding to its request from organizations and individuals representing a wide variety of perspectives.
The Administration’s Response
On January 9, 2017, the Obama administration released its response to the Supreme Court’s question based on the responses it received in the form of a frequently asked question (FAQ). It concluded that a process like the one suggested by the Supreme Court would not be acceptable to the religious entities and would present administrative and operational challenges that would undermine women’s access to health care. It decided, therefore, not to modify its accommodation regulations at this time.
The Supreme Court had suggested a procedure under which the objecting employers would contract with insurers to cover their employees but inform their insurers that they did not want to include contraceptive coverage to which they objected. The insurers would then separately provide contraceptive coverage to the employees without any involvement or payment from the objecting entity employers. The administration concluded based on comments it received that this compromise was not feasible for insurers.
Insurer Objections To Lack Of Written Notice
First, insurers commented that eliminating a written notice requirement would make it administratively difficult for them to track which entities were covered by the eligible organization absolute exemption from coverage—for whose female employers the insurer need take no action—and which entities were covered by the eligible religious entity accommodation—for whose female employers the insurer had to provide contraceptive coverage. A further complication would be determining in the absence of written notice which entities objected to all forms of contraceptives and which objected only to some forms.
Second, several commenters expressed concern that a lack of written notice could result in confusion and miscommunication, leading to disputes between the parties, billing problems, and reduced and disrupted access for women.
Third, comments from objecting religious organizations suggested that eliminating the notice requirement would not satisfy their objections. For at least some, any accommodation that resulted in contraceptive coverage for their employees was unacceptable.
The Problems With Separate Contraceptive-Only Insurance Policies
The administration also explored alternative means of providing contraceptive coverage for employees of objecting organizations. One approach suggested by the religious organizations would be for coverage through contraceptive-only insurance policies in which the employees would have to separately enroll.
Commenters identified a number of problems under state contract and insurance law with this approach. State insurance law, for example, may not permit single benefit coverage (other than dental and vision) or allow group insurers to sell individual coverage. Separate contraceptive policies might have different provider networks or might otherwise impede seamless access to contraceptive coverage for women. Although the administration determined that separate coverage for contraceptives is not feasible, it did clarify that it has no objection to the use of separate enrollment cards for contraceptive coverage.
Challenges Regarding Self-Insured Employers
Finally, there is the problem of self-insured employers, which the Supreme Court never addressed. While insurers are independently obligated to provide contraceptive coverage under the ACA, third party administrators of self-insured plans are not. They must rather provide coverage under authorization from either the employer or the federal government. Commenters failed to identify any way in which this could happen without written notice.
Some commenters suggested that the federal government could itself pay for contraceptive coverage for employees of self-insured employers directly or through the marketplaces. The administration concluded, however, that this was not feasible and would interfere with women’s seamless access to coverage.
What Happens Now?
Presumably the administration will notify the courts considering the cases remanded by the Supreme Court in Zubik that it will not be changing the accommodation. Those courts will then have to determine how to proceed. The case will likely return to the Supreme Court, which may by that time have a new member sympathetic to the cause of the religious organizations.
It is also possible, however, that the Trump administration will take a different approach to the accommodation of the objections of religious organizations, or that the preventive services requirement will be repealed altogether.