Government delivers Obamacare contraception rules compromise

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Stung by recent losses at the U.S. Supreme Court, the Obama administration moved Friday to quell continued religious and legal objections by some employers to the Affordable Care Act's mandate that their health plans offer birth control, while at the same time maintaining their workers' access to contraception at no additional cost.

Significantly, the administration is now proposing, for the first time, to allow certain for-profit companies that are not publicly traded the ability to avoid the mandate if they object to it on religious grounds. The public can comment on that proposal, and what form it will take.

And a new rule issued Friday by the administration will make it even easier than it already is for nonprofit religious organizations that object to paying for contraceptive services through their health plans to opt out.

Religious nonprofits already had the ability to opt out of the mandate, but had been required to file a self-certification form with their insurer. Nonprofits now will not be required to do that—some had argued that doing so would make them complicit in having the insurer then foot the bill for birth control for their workers.

That's because under the existing rules for nonprofits, employees will still receive birth control medication and devices at no additional cost, through a government-contrived workaround that will require insurance companies to foot the bill, at least temporarily. That same workaround is called for in the proposed accommodations for for-profit companies that object to the contraception mandate on religious grounds.

While Friday's announcement may satisfy some such employers, others are likely to continue ongoing court challenges to the contraception mandate on the grounds that any impact from it on their health insurance plans violates their religious rights, according to several lawyers, including one involved in an ongoing case.

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"The litigation, I think, will decease. It won't end," said Kent Greenfield, a Boston College law professor who has closely followed the issue.

It is not clear how many companies will avail themselves of the opt-out accommodations to the Obamacare mandate, which normally requires employer-based insurance plans to cover birth control at no additional out-of-pocket cost to workers, such as in the form of copayments for medication.

"Women across the country deserve access to recommended preventive services that are important to their health, no matter where they work," said Health and Human Services Secretary Sylvia Burwell in announcing the rules.

"Today's announcement reinforces our commitment to providing women with access to coverage for contraception, while respecting religious considerations raised by nonprofit organizations and closely held for-profit companies," Burwell said.

The new rule and the proposed one are outlined on a fact sheet posted by the federal Centers for Medicare and Medicaid Services on its website.

Both rules follow recent actions by the U.S. Supreme Court that endorsed the ability of some employers to avoid the mandate and related regulations for religious reasons.

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The proposed rule related to for-profit companies comes in response to the case decided in late June by the high court, which ruled that the crafts store chain Hobby Lobby did not have to comply with the Obamacare contraception mandate because of the religious objections of its Christian owners.

The Supreme Court suggested that "closely held" companies like Hobby Lobby, which is owned by members of a single family, were entitled to such an exemption because of their shared faith. The decision was the first time that the high court said the mandate did not apply to all for-profit entities.

Friday's proposed rule by the Health and Human Services Department reflects that ruling by offering to give for-profit companies the same pathway to getting a religious-based waiver from the mandate as already exists for nonprofit religious entities.

At the same time, HHS is attempting to limit the number of companies that could get such a waiver, by defining what "closely held" would mean in this context.

"The proposed rules describe two alternative approaches for defining such an entity," according to the fact sheet issued by the administration "Under one approach, the entity could not be publicly traded, and ownership of the entity would be limited to a certain number of owners."

"Under an alternative approach, the entity could not be publicly traded, and a minimum percentage of ownership would be concentrated among a certain number of owners. The number and concentration is not specified in the proposed rules, which solicit public comment on an appropriate number and/or concentration."

The new rule issued Friday, the one related to nonprofits, is in response to an interim order issued by the Supreme Court order barring the government from forcing Wheaton College to fill out the self-certification form in order to avoid the contraception mandate.

The Christian college had objected to that form on the grounds that by filing it with the insurance company it facilitated the issuance of certain birth control drugs which the college considers as causing abortion after the fertilization of an egg. Hobby Lobby's owners similarly objected to those drugs being covered by its health plans.

The rule issued Friday says that eligible nonprofits who oppose filing a form with their insurer "may notify the Department of Health and Human Services (HHS) in writing of its religious objection to contraception coverage," according to the HHS fact sheet.

"HHS will then notify the insurer for an insured health plan, or the Department of Labor will notify the [third-party administrator] for a self-insured plan, that the organization objects to providing contraception coverage and that the insurer or TPA is responsible for providing enrollees in the health plan separate no-cost payments for contraceptive services for as long as they remain enrolled in the health plan."

Mark Rienzi, Wheaton's lawyer, said he does not know if the rule will now satisfy the college, and lead it to drop its legal challenge to the mandate.

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But Rienzi said of the rule, "I don't think it's likely to satisfy a ton of people" because many religious-oriented employers would still see it as the government "taking over a health plan" and compelling someone else to pay the costs of covering birth control for their workers.

"I think a lot of people are still likely to object," said Rienzi. He urged the government to drop the idea of such workarounds, and instead either directly pay for the birth control costs itself, or subsidize the coverage through plans sold on government-run Obamacare exchanges.

Greenfield, the Boston College law professor, said, "My sense is that there are enough sort of religious objectors out there" that asking them to file a letter with HHS to opt out of the mandate would be objectionable enough to them that they would continue challenging the mandate.

Greenfield said he believed the federal courts will ultimately keep Obamacare's contraception mandate in place as long as their are opt-out provisions for certain religious-oriented employers.

But the creation of such an opt-out rule for for-profit employers could lead to additional legal challenges to the rule itself, if a company believes it too narrowly limits who can take advantage of it, he said.

—By CNBC's Dan Mangan