Balkinization  

Monday, December 16, 2013

Hobby Lobby Part III—There is no “Employer Mandate” [UPDATED 12/18]

Marty Lederman


As I explained earlier, the crux of plaintiffs’ RFRA claims in Hobby Lobby and Conestoga Wood is that the HHS “Preventive Services” Rule substantially burdens the religious exercise of the companies’ owners and managers by putting them to an untenable choice between their civil and religious obligations.  As the Hobby Lobby complaint puts it:  Plaintiffs will face an unconscionable choice: either violate the law, or violate their faith.” 

The plaintiffs theory is that by requiring the companies to offer their employees access to a health insurance plan that guarantees coverage without cost-sharing for certain forms of contraception, the HHS Rule allegedly forces the individuals who own and operate such companies to “participate in, pay for and support their employees use of abortion-causing drugs and devices” (quoting from the Hobby Lobby complaint)—something their religion is said to forbid. 

I hope to be able in later posts to examine whether the courts must defer to the plaintiffs’ counterintuitive assertion that such a requirement would compel the plaintiffs to be complicit in their employees use of contraceptives in a way their religions prohibit.  For now, however, I’ll assume that such deference is appropriate. 

Even so, the plaintiffs’ argument about an irresolvable clash between civic and religious obligations runs into a serious obstacle at the outset—namely, that federal law does not impose such a legal duty:  the so-called “contraception mandate” is a misnomer.

Rather, what Congress has done under the ACA is to establish a new social benefit to which everyone in the United States is entitled--affordable health insurance, including for certain categories of preventive care--and to offer large employers a choice between two ways of sharing in the societal burden of paying for that new entitlement.  At least one of those two employer options almost certainly would not impose a substantial burden on the plaintiffs’ exercise of religion—even on their own account of their religious obligations.  Moreover, with respect to that one of the two options a RFRA claim is virtually foreclosed by the Court’s unanimous 1982 decision in United States v. Lee.

As far as I know, every single court that has considered a challenge to the HHS Rule has failed to address this argument, because virtually every court has assumed, incorrectly, that the plaintiff employers are under a legal obligation, enforced by “fines or penalties, to offer their employees access to a health insurance plan.  Once it is understood that there is no such obligation, the RFRA claims ought to be seen in a very different light. 

1.  The Operation and Effect of the HHS Rule—What Must Health Care Plans Include?

By their terms, the HHS Rule and the underlying federal statute do not impose any obligations at all on employers, such as Hobby Lobby and Conestoga Wood—let alone on corporate shareholders or company administrators.  Instead, as I described in detail in my earlier post, federal law requires virtually all group health-insurance plans, and insurers of group or individual health insurance, to include coverage for various preventive services, including 18 forms of FDA-approved birth control, without “cost sharing”—i.e., without requiring plan participants and beneficiaries to make copayments or pay deductibles or coinsurance.  42 U.S.C. § 300gg-13.  (It’s not cost-free to the employees, of course:  They typically pay significant premiums for the insurance coverage itself.  But not having to make copayments or pay deductibles makes the services much more affordable.) 

Nevertheless, plaintiffs are correct about this much:  If a plan or insurer fails to include HHS-required coverage in a plan—for contraception or any other required service—the government can impose extremely onerous taxes not only upon the plan and the insurer, but also upon the sponsoring employer, such as Hobby Lobby or Conestoga Wood.  26 U.S.C. § 4980D(e)(1).  Those taxes are so severe that they would be catastrophic for most employers, virtually requiring them to go out of business.  (By the courts of appeals’ calculations, for example, Conestoga Wood would be liable for at least $95,000 a day; and Hobby Lobby would owe at least $1.3 million a day.)  Therefore, it is fair to say—as Hobby Lobby and Conestoga Wood do say—that if an employer offers its employees a health insurance plan, the HHS Rule would, indeed, virtually require that such plan include coverage for the specified forms of contraception without cost-sharing.  Or, at the very least, the tax imposed by § 4980D is so draconian that it would place enormous pressure on employers to comply—pressure that would be sufficient to at least trigger the “substantial burden” inquiry under RFRA.  (More on that below.)

2.  Federal Law Does Not, However, Require the Plaintiffs to Offer an Employee Health-Care Plan

OK, one might then ask, but if an employee health insurance plan must include contraception coverage, doesn’t the HHS Rule thereby de facto obligate all large employers to make such contraception coverage available to their employees, since such large employers are required by law to offer, and to partially subsidize, an employee plan?  Isn’t that what the Affordable Care Act “employer mandate” is all about? 

No.  Contrary to common wisdom, federal law does not impose a legal duty on large employers to offer their employees access to a health insurance plan, or to subsidize such a plan.  There is no such “employer mandate.”

What the ACA does, instead, is to impose a tax on large employers (just as with Social Security), ensuring that they share in the national burden of the new public entitlement—but with an option allowing such employers to avoid the tax if they offer a health insurance plan to their employees. 

As Joey Fishkin explained here, the whole point of the ACA is to create a new universal entitlement—affordable health insurance, including for the specified preventive services.  Individuals generally receive such coverage in one of four ways:  (i) through Medicaid, if they’re eligible; (ii) through Medicare, if they’re eligible; (iii) through an employer-provided insurance plan, if their employer offers one; or (iv) on the government “exchange,” if the individual is not covered in one of the other three ways.  With respect to individuals who have no choice but to purchase their insurance on the exchange, the creation of the exchange itself makes the cost of insurance lower; and most such persons also receive a premium tax credit or cost-sharing reduction from the federal government to make the purchase affordable.  (The government subsidies for this fourth option are calibrated to family income; my understanding is that the premium tax credit and cost-sharing reduction are not available for those families with income above 400% of the federal poverty level, or about $94,000 for a family of four.  But even for more well-to-do employees, the cost of health insurance on the exchanges will be considerably less than what the market price would be in the absence of the ACA.)

The Act requires the nations largest employers to share in the national burden of ensuring the comprehensive social benefit of comprehensive, affordable health insurance coverage.  In this respect, the Act resembles the Social Security Act, with one very important difference—namely, that the ACA offers employers greater discretion, a choice, about how to satisfy that social obligation.  In the case of Social Security, employers must contribute taxes to the government, and the government in turn provides the benefit to individuals.  Under the ACA, by contrast, Congress acted against the backdrop of a recent practice in which many large employers offered health insurance to their employees.  The legislature decided to build upon, and incorporate, that existing practice in its new scheme.  Accordingly, Congress afforded large employers two alternatives:  they can, as with Social Security, pay a tax to help subsidize the government’s provision of the benefit (Option iv above)—or they can offer their employees access to an insurance plan itself that gives employees the full scope of the universal benefit (Option iii above).

The key statutory provision in this regard is 26 U.S.C. § 4980H(a), which bears the appropriate title Shared responsibility for employers.  It amends the Internal Revenue Code to provide that a large employer (one that employed an average of at least fifty full-time employees during the preceding year) must make an “assessable payment” to the IRS if it chooses not to offer its full-time employees participation in an employer-sponsored health insurance plan.  (The assessment only kicks in in months where at least one full-time employee of the company receives a government-provided premium tax credit or cost-sharing reduction for enrollment in a health plan on the exchange.  I assume this will be true in virtually every month for these employers.)

The statute itself expressly refers to this payment as a “tax,” see id. § 4980H(c)(7), 2 U.S.C. § 18081(f)(2)(A), as well as an “assessable payment.”  The amount of the tax is $2000 per year for 30 fewer than the total number of the employer’s full-time employees.  (Part-time employees are not counted in this calculation.)  So, for example, if Hobby Lobby has 13,000 full-time employees, as it has alleged, then its annual assessment would be 12,970 x $2000 = $25,940,000.  As I explain below, this is almost certainly far less than the employer would spend on insurance premiums and/or outlays if it offered its employees a health-insurance plan.

Indeed, because of recent “transition relief extended by the IRS, if Hobby Lobby and/or Conestoga were to drop their insurance plans today, they would not owe any assessment to the federal government until 2015, and their employees would be entitled to government-subsidized insurance on the exchanges without any cost to the employers for the next year.

When the assessment obligation goes into effect, in 2015, the taxes submitted by large employers without employee plans would go into general revenues at the Treasury Department (as far as I know).  They thereby will indirectly help to subsidize the premium tax credit or cost-sharing reduction that the federal government offers to most individuals who have no option but to purchase their health coverage on a health insurance exchange.  Critically, such individuals include, of course, the employees of those employers that choose not to provide a health-insurance plan.

Virtually every court of appeals that has decided one of these contraception cases—including the courts in Hobby Lobby and Conestoga Wood—has assumed that § 4980H imposes a “penalty” or “fine” upon an employer for failing to abide by a legal requirement to provide employee health insurance.  See, e.g., Hobby Lobby, 723 F.3d at 1125 (CTA10) (“If the corporations instead drop employee health insurance altogether, they will face penalties of $26 million per year.”); Conestoga Wood, 724 F.3d at 393 (CTA3) (“In the alternative, Conestoga presumably could drop employee health insurance altogether, and it would then face a reduced fine of $2,000 per full-time employee per year (totaling $1.9 million).”); Autocam Corp. v. Sebelius, 730 F.3d at 621 (CTA6) (“Autocam would still face substantial financial penalties if it chose to drop coverage entirely because it is required to provide health insurance to its employees due to the company's size.”); Korte v. Sebelius, 735 F.3d at 660 (CTA7) (“If an employer discontinues offering a health plan altogether, the penalty is $2,000 per year per employee.”); see also Thomas More Law Center, 651 F.3d at 534 (CTA6) (§ 4980H requires certain large employers to offer health insurance to their employees”); New Jersey Physicians v. POTUS, 653 F.3d at 237 (CTA3) (§ 4980H penalizes such employers if they fail to offer their full-time employees the opportunity to enroll in an employer-sponsored insurance plan”); Florida v. HHS, 648 F.3d at 1260 (CTA11) (“The Act imposes a penalty, also housed in the Internal Revenue Code, on certain employers if they do not offer coverage, or offer inadequate coverage, to their employees.”).

This is simply mistaken.  There is no underlying “employer mandate” that requires large employers to offer an employee health insurance plan.  There is only § 4980H itself.  And as the Court of Appeals for the Fourth Circuit recently explained in the Liberty University case, § 4980H “does not punish unlawful conduct”—instead, it “leaves large employers with a choice for complying with the law—provide adequate, affordable health coverage to employees or pay a tax.”  733 F.3d at 98.  (The court further explained that the amount of the exaction “is proportionate” to the need to ensure universal coverage, “rather than punitive.”  Id.) 

Sound familiar?  It should.  Courts of appeals offered virtually the same exact mistaken reading of the ACA in the so-called “individual mandate” cases—until the Solicitor General and then the Supreme Court corrected them in the landmark Health-Care Cases (a/k/a NFIB v. Sebelius).  You may recall that § 5000A of the Act—the provision at issue in the Health Care Cases—actually provides that an individual “shall” maintain a minimum level of health coverage, and that a penalty shall be imposed on any person who fails to meet th[at] requirement.  Even in light of this language of obligation, the Court held that the “shared responsibility payment” of § 5000A “merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance,” 132 S. Ct. at 2597.

So, too, § 4980H merely imposes a tax that employers may lawfully choose to pay “in lieu of” offering their employees access to a health insurance plan.  And, most importantly, here, too, “[n]either the Act nor any other law attaches negative legal consequences to not [providing employee] health insurance, beyond requiring a payment to the IRS,” so that if an employer “chooses to pay rather than [provide] health insurance, they have fully complied with the law.”  Id. at 2597.  Indeed, in this respect, construing § 4980H to offer a choice among lawful options is a considerably easier task than it was for § 5000A, for there are no comparable terms of apparent compulsion (such as “shall provide insurance”) in § 4980H—the requirement of an “assessable payment” to the IRS, denominated a tax rather than a penalty, is all there is.

To be sure, even in the absence of an express regulatory duty, a tax can in effect be so disproportionate to its condition that it can only be understood as a penalty for engaging in, or not engaging in, certain conduct—a “mere penalty with the characteristics of regulation and punishment.”  NFIB, 132 S. Ct. at 2599.  For example, if federal law did require employers to provide employee health insurance, then even though the ACA does not in so many words expressly impose a legal requirement that such insurance cover contraception and other preventive services, the extremely onerous taxes assessed by § 4980D—in effect putting employers to the choice between including such coverage and shutting down their business—would impose a de facto legal obligation to include such coverage.

The § 4980H(a) assessment, by contrast, does not even come close to being a “mere penalty” for failing to offer health insurance to ones employees, especially since it will generally be far less costly to an employer than retaining an employee health insurance plan.  To be sure, Congress might have designed § 4980H(a) to provide some incentive, at least at the margin, for large employers to retain their employee health insurance plans.  But “taxes that seek to influence conduct are nothing new.”  NFIB, 132 S. Ct. at 2596; see also Steward Machine Co. v. Davis, 301 U.S. at 589-590 (“[E]very rebate from a tax when conditioned upon conduct is in some measure a temptation.  But to hold that motive or temptation is equivalent to coercion is to plunge the law in endless difficulties.”). 

And more to the point, the principal function of the assessment is merely to ensure that large employers make a reasonable contribution to the cost imposed upon the federal government to provide affordable insurance to individuals on the exchanges—including the employers’ own employees, if they are forced onto the exchange by virtue of the employer’s choice to discontinue its own plan.  (In this respect, it is a compensatory measure.)

Accordingly, neither the ACA nor any other federal law imposes any duty upon Hobby Lobby and Conestoga Wood to provide employee insurance coverage, let alone to provide coverage for the purchase of contraceptives.  Instead, the ACA affords those companies, and other large employers, “a lawful choice,” NFIB, 132 S. Ct. at 2600, about how to share in the burden of ensuring the new national entitlement:  They must either offer their full-time employees and their dependents an opportunity to obtain coverage under an employer-sponsored health insurance plan, or pay assessments to the federal government, so that the government can in turn subsidize health insurance on an “exchange” for otherwise-uninsured employees, including the employer’s employees.  This explains why provisions such as these are colloquially known as “Pay or Play--because both paying and playing are valid, lawful options.

3.  The Effect of the § 4980H Employer Choice on Plaintiffs’ RFRA Claims.

How does § 4980H(a) affect the RFRA question in our two cases?  Crucially, it means that the plaintiffs cannot prevail unless they demonstrate that each of their two lawful options would “substantially burden” their exercise of religion.

Let’s assume, for present purposes, that the first of those two options—offering employees access to health insurance with coverage of the 18 required, FDA-approved forms of birth control—would “substantially burden” the exercise of religion of Hobby Lobby’s and Conestoga Wood’s owners for purposes of RFRA.  (Time permitting, I may subject that assumption to further examination in future posts . . . but we can accept it as true for now.)

Even so, federal law does not require the employers to provide their employees with access to such insurance—they can make a § 4980H tax payment instead, and thereby remain fully in compliance with the law.  The question thus becomes whether the plaintiffs have pleaded facts that, if proved, would demonstrate that RFRA requires an exemption from payment of the § 4980H(a) tax.  I don’t think they have.  Indeed, their claims likely would not get beyond the RFRA threshold inquiry, since plaintiffs have not alleged facts that would demonstrate that paying the tax would substantially burden their religious exercise.

For starters, it would be untenable for the plaintiffs to argue—and they have not alleged—that making the payment itself would violate their religion by making them complicit in, or responsible for, the use of contraceptives by anyone who subsequently uses insurance purchased from a government exchange.  After all, plaintiffs’ tax dollars already are used by the federal government to subsidize insurance provided on the exchanges, as well as through Medicaid and Medicare . . . and, with good reason, these employers do not argue that the government’s tax assessments substantially burden their religious exercise by virtue of the fact that a tiny fraction of the federal treasury is used in a way that eventually subsidizes the use of contraception.  (Federal dollars are, after all, used to pay for many things that are religiously or morally objectionable to many taxpayers.)

Indeed, a central component of plaintiffs’ own RFRA arguments is that a “less restrictive” means for the government to further its interests without substantially burdening plaintiffs’ religious exercise would be for the government to use its own revenues to subsidize contraceptive use by Hobby Lobby and Conestoga Wood employees.  Well, that is exactly what would occur if those employers were to choose to make a § 4980H(a) payment rather than offering their employees access to an employer plan. 

For this reason, plaintiffs have not alleged, and presumably would not argue, that their religion prohibits making the payment itself, or that § 4980H somehow requires them to violate a religious injunction.

That does not end the “substantial burden” analysis, however.  To understand why, I’m afraid a bit of background is in order concerning the “substantial burden” prong of RFRA.  Those who don’t wish to be bothered with the legal minutiae can skip ahead a few paragraphs.

As I noted in my first post, Congress intended RFRA to incorporate by reference the Supreme Court’s Free Exercise Clause doctrine from the period between Sherbert v. Verner (1963) and Employment Division v. Smith (1990), a body of case law that Congress determined to be “a workable test for striking sensible balances between religious liberty and competing prior governmental interests.”  42 U.S.C. § 2000bb(a)(5).  The committee reports made clear that courts should “look to free exercise cases decided prior to Smith for guidance in determining whether the exercise of religion has been substantially burdened and the least restrictive means have been employed in furthering a compelling governmental interest. . . .  [T]he compelling interest test generally should not be construed more stringently or more leniently than it was prior to Smith.”  S. Rep. No. 111, 103d Cong., 1st Sess. 8-9; accord H.R. Rep. No. 103-88, 103rd Cong., 1st Sess. 7 (1993); see also id. at 14-16 (views of Reps. Hyde, Sensenbrenner, McCollum, Coble, Canady, Inglis, and Goodlatte) (“A major issue of contention in the 102nd Congress was whether the bill was a true ‘restoration’ of the law as it existed prior to Smith or whether it sought to impose a statutory standard that was more stringent than that applied prior to Smith. . . .  Several changes were made to the bill during the Judiciary Committee markup in late September of 1992 and prior to the bill’s introduction in 103rd Congress.  [ML:  Most importantly, earlier proposed versions of RFRA had required the government to show that denial of an exemption was “essential to” a compelling government interest; but RFRA as enacted requires the government merely to show that the denial is “in furtherance” of a compelling interest.]  These changes resolved the ambiguity about the standard to be applied and made it clear that the bill does not reinstate the free exercise standard to the high water mark as found in Sherbert v. Verner and Wisconsin v. Yoder, but merely returns the law to the state as it existed prior to Smith. . . .  The amendments . . . make clear that the purpose of the statute is to ‘turn the clock back’ to the day before Smith was decided.”).

In particular, RFRA’s use of the phrase “substantial burden” was designed to refer to the sorts of burdens on religious exercise that the Court of the pre-Smith era would have recognized as triggering the requirement for the government to justify denial of an exemption under the “compelling interest” test.  See 139 Cong. Rec. S14352 (daily ed. Oct. 26, 1993) (statement of Sen. Kennedy) (amendment offered by Senators Hatch and Kennedy, and unanimously agreed to by the Senate, to change “burden” to “substantially burden,” “is intended to make it clear that the pre-Smith law is applied under the RFRA in determining whether” a governmental burden on religion “must meet the [compelling interest] test”).

The problem, however, is that the Courts pre-Smith jurisprudence was anything but clear on the question of how to identify the requisite type and degree of burden on religious exercise.  That assessment arguably depended upon several variables, such as:
-- whether the religious exercise in question is compelled by, or instead merely motivated by, the claimant’s religion;

-- the importance of the religious exercise to the claimant, which might (arguably) be evidenced by the claimant’s own conduct; and

-- the extent to which the state action would impede the religious exercise (e.g., would it be entirely foreclosed, or only limited to a certain degree?).
The Court’s pre-Smith case law, however, did establish one uncontroverted aspect of the “substantial burden” assessment:  As a threshold matter, the law or other state action in question must either legally compel the claimant to compromise her religious exercise, or at a minimum impose “substantial pressure” on her to do so; otherwise, there cannot be a cognizable burden on the exercise of religion.

The easiest case where this threshold standard is satisfied is when the state specifically imposes a legal duty to act or to refrain from acting—sometimes, but not always, backed up by threat of criminal sanction.  Therefore, in the Hobby Lobby and Conestoga Wood cases, if federal law actually imposed a legal duty on employers to offer employee health insurance that included the contested forms of contraception (which the ACA does not do—see above), this threshold test for substantial burden would be satisfied.  (That doesn’t mean that there would necessarily be a substantial burden on religious exercise—as noted above, that question might depend on additional considerations, as well.)

Still, it is not necessary that the law impose an express legal duty.  State action that has the “same coercive effect” on religious exercise as does imposition of a legal duty, Sherbert, 374 U.S. at 404 n.5, can also create sufficient pressure to trigger the governments burden.  If, for example, a law places a condition on an individual’s ability to continue engaging in a certain profession, that might have the requisite coercive effect, at least where the individual has invested many years or significant resources in the profession or the enterprise. 

The coercion question can also arise when the state imposes conditions on the receipt of state-conferred benefits.  On the one hand, if the benefit in question is a very modest one that is only provided to a select few recipients, a required condition for receipt of such benefit would not likely create the requisite degree of pressure to comply.  But on the other hand, as the Court explained in Thomas v. Review Board (1982), “[w]here the state conditions receipt of an important benefit upon conduct proscribed by a religious faith, or where it denies such a benefit because of conduct mandated by religious belief, thereby putting substantial pressure on an adherent to modify his behavior and to violate his beliefs,” the “infringement upon free exercise is nonetheless substantial,” even though “the compulsion may be indirect.”  450 U.S. at 717-718.  So, for example, the Court explained in cases such as Sherbert and Thomas that a condition placed upon collection of unemployment compensation could be sufficiently coercive as to trigger the requirement of government justification for denying an exemption.

The threshold question in Hobby Lobby and Conestoga Wood is therefore whether the plaintiffs have alleged facts to support the notion that the tax assessment in § 4980H is of such a nature that it would place “substantial pressure” on them to offer an employee insurance plan (which by law would have to include contraception coverage).  I can imagine three arguments they might make in this regard.

a.  First, plaintiffs might simply argue that the tax itself is so costly, compared to the cost of offering employee health insurance, that it imposes substantial pressure on them to choose the latter option.  As far as I can tell, plaintiffs have not tried to press this argument—and for good reason, because paying the assessment would almost certainly be far less costly than continuing to offer health insurance to the companies’ employees. 

A typical employer with a health plan pays more than $4000 in annual premiums for single employees, and almost $12,000 for employees with families.  This is by far the most costly component of employee compensation other than salary.  The § 4980H(a) assessment, by contrast, would cost the employers less than $2000 per full-time employee per year.  To be sure, such an assessment would be nondeductible, whereas the cost of employee insurance is deductible and can be paid with pre-tax dollars.  Even so, it is almost certain that, as in NFIB, here, too, “the amount due will be far less than the price of insurance,” and therefore “[i]t may often be a reasonable financial decision to make the payment rather than purchase insurance.”  132 S. Ct. at 2595-96.

The cost of the assessment itself, then, will not impose substantial pressure on an employer to retain an employee insurance plan in violation of its alleged religious obligations.

b.  Second, in its brief at the cert. stage, Hobby Lobby asserted without elaboration that it will suffer “significant competitive disadvantages in hiring and retaining employees” if it were to discontinue its plan.  Any disadvantages, however, should be negligible, at most, with respect to the vast majority of employees, since they would still be eligible for government-subsidized health insurance on the exchange. 

Presumably, Hobby Lobby is referring instead to its more highly compensated employees:  perhaps some of them would not be eligible for the government subsidy and therefore would have to purchase insurance on the exchange that might be more costly than the premiums they have been paying for the Hobby Lobby employee plan.  If so, Hobby Lobby can ameliorate this potential problem by simply using some of the money that it saves under § 4980H to sweeten such employees’ compensation packages.  It is doubtful that any residual, marginal disadvantages in terms of employee retention would outweigh the overall cost-savings in such a way as to as substantially pressure Hobby Lobby to retain its insurance plan. 

Accordingly, it’s almost certain that Hobby Lobby would benefit economically if it exercised the section 4980H(a) option, even accounting for the costs of employee recruiting and retention. [UPDATE 12/18:  Several readers have very helpfully explained to me that preexisting federal law provides incentives for employers not to abandon their employee health insurance plans, even after the creation of the government-subsidized exchanges, which would likely motivate most (but not all) employers to retain their plans.  I hope to be able to write a follow-up post on this soon, as it would appear to complicate the RFRA analysis here.  UPDATE 12/28:  Here's the follow-up post.] 
 
To be sure, my calculations here are speculative—they are based upon the norms for most employers.  We do not know what the evidence would show with respect to these two particular businesses.  But Hobby Lobby and Conestoga Wood have the burden of proof under RFRA to demonstrate the “substantial burden” on their religious exercise, and they have not alleged facts that would be sufficient to demonstrate that their situations are so far outside the norm as to impose substantial pressure on them to retain plans that they could otherwise abandon in order to avoid any violation of their religious obligations. 

c.  Another argument is possible, but unlikely:  The individual plaintiffs might argue that they have an actual religious obligation to provide a health insurance plan to anyone they employ.  There is a hint of such an argument lurking in the complaints.  See Hobby Lobby complaint paragraph 52 (“As part of their religious obligations, the Green family also provides excellent health insurance coverage to Hobby Lobby’s and Mardel’s employees through a self-insured plan.”); Conestoga Wood complaint paragraph 36 (“As part of fulfilling their vision and mission statement and religious beliefs and commitments, Plaintiffs provide generous health insurance for their employees.”).

I would be surprised, however, if the plaintiffs argue that their religions actually requite them to guarantee their employees subsidized health insurance (a relatively recent workplace practice), let alone that their religions require that such insurance be subsidized by the employer directly rather than by the government (using employer funds, in part).  To be sure, the allegations in the complaints suggest that the plaintiffs’ religions encourage them to make sure their employees are well-cared-for.  But that is entirely consistent with what would happen if the employers were to make § 4980H(a) payments.

* * *

For these reasons, even if it were the case that a legal requirement to provide a particular form of employee insurance coverage would “substantially burden” these plaintiffs’ exercise of religion for purposes of RFRA—a questionable proposition that I may examine in later posts—“the option of paying a tax” under § 4980H(a) as an alternative to providing such insurance “certainly imposes no substantial burden [under RFRA],” as the Fourth Circuit recently held.  “On the contrary, this option underscores the ‘lawful choice’ Plaintiffs have to avoid any coverage they might consider objectionable.”  Liberty Univ., 733 F.3d at 100 (quoting NFIB v. Sebelius, 132 S. Ct. at 2600). 

4.  The § 4980H Assessment and United States v. Lee

Even putting aside the particular question of a “substantial burden” on plaintiffs’ religious exercise, the fact that there is no federal “mandate,” or legal duty, for the plaintiffs to offer insurance plans of a particular sort undermines the plaintiffs’ RFRA claims in a more fundamental respect:  It explains why those claims run headlong into the Court’s unanimous 1982 opinion in United States v. Lee, concerning a religious liberty challenge to a tax for another universal federal entitlement program, Social Security.

The federal government generally requires employers to pay Social Security taxes on behalf of their employees, in order to help subsidize a universal government-distributed entitlement.  The petitioner in Lee, a member of the Old Order Amish, was a farmer who employed fellow members of his faith.  He believed it was sinful to contribute to a government assistance program for those employees, because he thought such taxes undermined the obligation of the Old Order Amish themselves to provide for their fellow members the kind of assistance contemplated by the Social Security system. 

The Court held unanimously that the federal government’s refusal to afford Mr. Lee an exemption did not violate the Free Exercise Clause.  “The social security system in the United States,” explained the Court, “serves the public interest by providing a comprehensive insurance system with a variety of benefits available to all participants, with costs shared by employers and employees.”  The very design of this system “requires support by mandatory contributions from covered employers,” which is “indispensable to the fiscal vitality of the social security system.”  “[A] comprehensive national social security system providing for voluntary participation,” the Court concluded, would be almost a contradiction in terms and difficult, if not impossible, to administer.”  455 U.S. at 258. 

It follows virtually a fortiori that Hobby Lobby and Conestoga Wood could not establish a valid RFRA objection to the payment required by § 4980H(a).  Here, as in Lee, we have “a comprehensive insurance system . . . available to all participants.”  In particular, virtually all women in the United States are entitled to coverage for preventive care, including contraception coverage, without cost-sharing.  And the very design of this system, too, requires the support of large employers, who are “indispensable to the fiscal vitality of the . . . system.”

Indeed, the case for a religious exemption in this case is even weaker than the claim the Court unanimously rejected in Lee, in at least two respects.  First, the plaintiff in Lee was not entitled to an exemption even though the Court accepted his representation that the payment of the tax itself would violate his religious obligations.  Here, plaintiffs make no such claim that payment of the tax would violate their religious obligations—to the contrary, in their view, a tax-supported government insurance program is the preferred solution to their alleged religious conflict.

Second, in Lee the employer had only one option—pay the taxes (which compelled him to violate his religious precepts).  Here, by contrast, the government is offering employers precisely the choice that Lee was requesting—namely, the option between paying the taxes to the government so that the government can provide the employee benefits, and offering the employees those benefits themselves.  It seems hard to imagine that if the religious exemption claim in Lee was unavailing, such a claim would be on firmer ground where, as here, the government actually affords the employer an alternative that does not require the alleged transgression of a religious injunction.

What the plaintiffs here appear to be seeking is a third or a fourth alternative, beyond the two that Congress has afforded them--that either:
(iii) their female employees should be virtually the only women in the nation (apart from employees of churches and their auxillaries) who must pay out of pocket for certain contraception costs; or 

(iv) for-profit employees should be permitted an “in-between option,” in which they neither pay the assessment nor offer their employees the comprehensive health insurance to which all Americans are entitled, but instead provide their employees with a “not quite” insurance plan that covers most, but not all, preventive care and other required services, thereby leaving the government itself with the burden of providing selective, “supplemental” insurance to the disfavored employees on a case-by-case basis for whichever services a particular employer refuses to offer for religious reasons—potentially an administrative, and perhaps a budgetary, nightmare.
It is hard to imagine that the Court’s pre-RFRA Free Exercise doctrine would have required the government to offer either or both of these additional options.

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