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Balkinization Symposiums: A Continuing List E-mail: Jack Balkin: jackbalkin at yahoo.com Bruce Ackerman bruce.ackerman at yale.edu Ian Ayres ian.ayres at yale.edu Corey Brettschneider corey_brettschneider at brown.edu Mary Dudziak mary.l.dudziak at emory.edu Joey Fishkin joey.fishkin at gmail.com Heather Gerken heather.gerken at yale.edu Abbe Gluck abbe.gluck at yale.edu Mark Graber mgraber at law.umaryland.edu Stephen Griffin sgriffin at tulane.edu Jonathan Hafetz jonathan.hafetz at shu.edu Jeremy Kessler jkessler at law.columbia.edu Andrew Koppelman akoppelman at law.northwestern.edu Marty Lederman msl46 at law.georgetown.edu Sanford Levinson slevinson at law.utexas.edu David Luban david.luban at gmail.com Gerard Magliocca gmaglioc at iupui.edu Jason Mazzone mazzonej at illinois.edu Linda McClain lmcclain at bu.edu John Mikhail mikhail at law.georgetown.edu Frank Pasquale pasquale.frank at gmail.com Nate Persily npersily at gmail.com Michael Stokes Paulsen michaelstokespaulsen at gmail.com Deborah Pearlstein dpearlst at yu.edu Rick Pildes rick.pildes at nyu.edu David Pozen dpozen at law.columbia.edu Richard Primus raprimus at umich.edu K. Sabeel Rahman sabeel.rahman at brooklaw.edu Alice Ristroph alice.ristroph at shu.edu Neil Siegel siegel at law.duke.edu David Super david.super at law.georgetown.edu Brian Tamanaha btamanaha at wulaw.wustl.edu Nelson Tebbe nelson.tebbe at brooklaw.edu Mark Tushnet mtushnet at law.harvard.edu Adam Winkler winkler at ucla.edu Compendium of posts on Hobby Lobby and related cases The Anti-Torture Memos: Balkinization Posts on Torture, Interrogation, Detention, War Powers, and OLC The Anti-Torture Memos (arranged by topic) Recent Posts Hobby Lobby Part III—There is no “Employer Mandate” [UPDATED 12/18]
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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 nation’s 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 one’s 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 Court’s 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:
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 government’s 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
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.
Posted 9:36 AM by Marty Lederman [link]
|
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