Obamacare is headed back to the Supreme Court—with a losing record in the lower courts.
Later this month, the justices will meet in private to decide whether they should hear a challenge to the health care law's contraception mandate. Three of five federal Appeals Courts that considered the matter have ruled at least partially against the mandate; their divisions make a Supreme Court intervention likely. This is bad news for the administration's signature policy achievement.
The Affordable Care Act requires most employers to include contraception in their employees' health care plans, without charging a co-pay or deductible. It's part of a provision that guarantees coverage, without cost sharing, for preventive services. Churches and houses of worship are exempt from the requirement altogether, and there is a middle ground for religious-affiliated employers such as Catholic hospitals and universities. Some of these have sued, but cases from purely secular, for-profit businesses have moved the fastest through the courts, thanks to the dispute over whether for-profit companies can invoke religion. "That is a threshold question that the Supreme Court has never addressed, and could be dispositive in these cases," says Louise Melling, deputy legal director at the American Civil Liberties Union.
The highest-profile case is a 10th Circuit Court of Appeals opinion that says corporations can hold religious beliefs—and sue to defend them. The court ruled that Hobby Lobby, a chain of arts-and-crafts stores, could seek an exemption from the mandate because its owners have a religious objection to birth control. Citing the Supreme Court's Citizens United ruling on campaign finance laws, the judges said that corporations (and not just the people who own them) can exercise First Amendment rights. "Would an incorporated kosher butcher really have no claim to challenge a regulation mandating non-kosher butchering practices?" Judge Timothy Tymkovich asked in his opinion for the majority?
Therefore, Tymkovich wrote, a corporation can sue over government mandates that offend the religious beliefs of its owner. He said the mandate was a "substantial burden" on the company's religious beliefs; that the government had not demonstrated a compelling interest in restricting its religious freedom; and that if the government had such an interest, it could find a less intrusive way to follow through.
Those three criteria determine whether First Amendment infringements are legal, and the Obama administration hasn't won on those grounds in a single contraception case. Its victories have all been on questions of legal standing. The 3rd Circuit Court of Appeals, for example, ruled that a for-profit corporation—a cabinet-making firm called Conestoga—could not exercise religious beliefs and therefore could not sue. And the owners themselves, the Hahn family, couldn't sue because they personally weren't subject to the contraception mandate. "As the Hahns have decided to utilize the corporate form, they cannot 'move freely between corporate and individual status to gain the advantages and avoid the disadvantages of the respective forms,' " the 3rd Circuit said, quoting an earlier ruling. That case, a win for the Justice Department, was similar to a 6th Circuit opinion.
But when an Appeals Court has considered the mandate's actual legal merits, either from a company or its owners, it has blocked the mandate. The 7th Circuit Court of Appeals did so and held that both a for-profit corporation and its owners may sue over the contraception mandate. The D.C. Circuit said only the individual owners could sue—and sided with them against the birth-control policy.
The Justice Department and the Hobby Lobby have asked the Supreme Court to review the ruling—a rare combination that makes the justices likelier to hear it. Allowing the 10th Circuit's ruling to stand would "transform … a shield for individuals and religious institutions into a sword used to deny employees of for-profit commercial enterprises the benefits and protections of generally applicable laws," the Justice Department said in its brief asking the Supreme Court to step in. Because four of the five Circuit Court decisions have been appealed to the high court, legal experts say the justices might combine two or more cases just to be sure they answer all the relevant questions at once.
The contraception mandate is a politically popular piece of President Obama's main domestic policy achievement. If the Supreme Court combines the cases to reach a broad ruling, and especially if it opens the door to new legal protections for corporations, the White House could find itself ruing the defeat of a crucial policy next summer, rather than celebrating the two-year anniversary of the Court's landmark decision upholding the Affordable Care Act.
This article appears in the November 16, 2013 edition of National Journal Magazine as Bitter Pill.