Should Corporations Have the Same Religious Freedoms as People?

An analysis of today's Supreme Court arguments in the "Hobby Lobby" case

Demonstrators participate in a "Not My Boss's Business" rally outside the Supreme Court this morning. (Reuters)

The Affordable Care Act is a Soviet-style Leviathan, enacted by a Congress eager to crush liberty under a boot of mandates.

The Affordable Care Act is a half-hearted, ineffectual Potemkin village, enacted by a Congress that didn’t really care one way or the other.

Paul Clement warned the Supreme Court in 2012 against Obamacare A—the dystopian Big Brother. Today, he was back at the Supreme Court to warn against Obamacare B—the flimsy Funny Uncle.

The facts of the two cases the Court heard today, Sebelius v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corporation v. Sebelius, are these: The ACA requires employers either to pay a tax or to provide health insurance for their employees. The health insurance provided must comply with guidelines developed for the Department of Health and Human Services by the Institute of Medicine. These guidelines require coverage for vaccination, diabetes screenings, domestic violence counseling—and the full set of medically approved contraceptive methods.

There are exemptions, of course. Businesses that have 50 or fewer employees do not need to provide the insurance or pay the tax. “Religious corporations,” such as churches and convents, may omit contraceptive coverage from their plans altogether. Religiously affiliated non-profits, such as hospitals, may certify their objection to contraception; their employees will receive coverage from the third-party insurer without participation by the employer. And for-profit companies with existing plans are temporarily “grandfathered”—if the current plans don’t cover contraception, they don’t need to add the coverage until they make major changes to their plans.

Hobby Lobby Stores and Conestoga Wood, however, don’t fit any of these categories. Conestoga Wood, owned by a Mennonite family, makes specialty wood products and employs 950 people; Hobby Lobby is a chain of craft stores owned by devout Baptists, employing more than 13,000 people. Both businesses object to four currently approved methods of contraception, claiming they are “abortifacients.” They want an exemption permitting them to offer policies to employees that will not cover those four. They base their claim not directly on the Constitution’s Free Exercise Clause, but on the Religious Freedom Restoration Act. That Act was passed in 1993 to reverse a 1990 case in which the Court held that the state of Oregon could deny unemployment insurance to two individuals who had been fired for attending a peyote-religion ceremony. The Act restored what was called the “compelling interest” test—the state may not “substantially burden” a “person’s” practice of religion unless there is a “compelling interest” and the burden is the least restrictive way to further it.

The first obstacle for the companies is the fact that they are for-profit companies. Clement tried to dispose of that by pointing to an earlier law, the Dictionary Act, which defines the word “person” to include corporations. The term “specifically applies to all corporations, to joint partnerships, to societies,“ he said. Solicitor General Donald Verrilli countered that the Dictionary Act didn’t define “exercise of religion”: For-profit corporations don’t exercise religion, he said. “In the entire history of this country, there is not a single case in which a for-profit corporation was granted an exemption.”

Justice Scalia interjected, “Not a single case in which it was denied exemption, either.” Verrilli pointed out that an Amish business owner had been denied an exemption from paying Social Security tax on his employees; but one doubts he convinced Scalia.

The real battle was about whether the Act’s aims—expanding health-care coverage for workers and families, boosting public health generally, and facilitating women’s access to reproductive health in particular—are “compelling.” “There is a compelling interest in women's health and in the health of the family,” Verrilli told the Court. “And so the government has said provide it.”

Clement responded: If contraceptive coverage is important, why did the ACA allow some religious corporations to opt out? Why does it allow “grandfathered” plans not to add it until they make changes? “When the government pursues compelling interest, it demands immediate compliance. It doesn't say, ‘Get around to it whenever it's convenient,’” he said. “I can't imagine Congress passing Title VII [forbidding employment discrimination by race and sex] and saying, ‘Stop discriminating on the basis of race, unless of course you have a preexisting policy that discriminates on the basis of race, and then you can keep it as long as you'd like.’”

Justice Elena Kagan pointed out that Title VII had in fact delayed its effect on small business to give business owners time to adjust. Verrilli pointed out that Title VII in fact, a half-century after passage, still doesn’t apply to employers with fewer than 15 employees. Verrilli added that the Americans With Disabilities Act delayed its prohibition on disability-discrimination for two full years to allow time to prepare. “I don't think anybody would doubt that the Americans With Disabilities Act advances interest of the highest order,” he said.

In fact, Verrilli said, the exemptions Clement complains about are actually few and narrow. The “grandfathered” plans will add coverage over the next few years—changes in plans are frequent, and as they change the mandate will kick in. Employees of churches and so on will not be covered—but employees of religiously affiliated non-profits will get their coverage from the insurer when their employer certifies its objection to paying. Clement suggested the government could use the same method to accommodate his clients. Justice Sotomayor asked him to commit his client to complying with that procedure. “You're saying they would claim an exemption like the churches have already?” Sotomayor asked. Clement dodged: “We haven’t been offered that accommodation.” The odds are good, of course, that Hobby Lobby would refuse it—its objection is to “facilitating,” not just paying for, the disfavored contraceptives.

The lineup of the Justices isn’t complex. The four Democratic appointees—Ruth Bader Ginsburg, Stephen Breyer, Sotomayor and Kagan—seemed favorably inclined to the mandate. Roberts, Scalia, and Samuel Alito were clearly opposed to it. The only question seemed to be whether they would make a narrow exemption—only for family-held corporations—or follow Clement’s urging to extend RFRA exemptions to all. (Clement did admit that Exxon might have trouble proving its sincerity.)

Justice Kennedy seemed troubled that Clement ignored the interests of the corporations’ employees: “The employees are in a position where the government, through its healthcare plans, is—is, under your view, is—is allowing the employer to put the employee in a disadvantageous position. The employee may not agree with these religious—religious beliefs of the employer. Does the religious beliefs just trump? Is that the way it  works?”

Yes, Clement answered. “[A]n employer right now can put some burden on their rights because they have to listen to religious music or whatever. That's not as serious as a burden that's coming directly from the government.” This was a remarkable and potentially damaging claim. But Kennedy’s questions to Verrilli boded ill for the mandate. “Under your view,” he asked, “a profit corporation could be forced ... in principle to pay for abortions.”

Verrilli responded, “If it were for a for-profit corporation and if such a law like that were enacted, then you're right, under our theory . . . the for-profit corporation wouldn't have an ability to sue.” Though he added, “there is no law like that on the books.” That answer, with its image of government-sponsored abortion doctors storming corporate workplaces, sounded a lot like a death-knell for the mandate.

Clement has asked the Court to note that contraception is “religiously sensitive,” and if that is part of the court’s reasoning, employers will be back asking for exemption from providing any method of contraception. Women’s health—which to me seems like a compelling interest—will be placed in a special second-place status.

But in some ways, the “government can’t provide exemptions” rule could be more damaging. It simply makes no sense to say that any attempt to tailor a statute to allow time for the economy to adjust, or to avoid burdening religion, or to exempt small businesses, will doom the whole thing. If that becomes the law, it will become prohibitively difficult for future Congresses to craft any new regulatory program.

Kagan confronted Clement with this question. He had just compared the ACA to a law requiring him to give his private Bible to someone else. “Mr. Clement, isn't that just a way of saying that you think that this isn't a good statute, because it asks one person to subsidize another person?” she asked.

I don’t doubt Clement’s clients are sincere; but they are part of a larger war against the ACA. The critique of the ACA all along has been that it is “unprecedented,” as if novelty in a government program were something the Framers frowned upon. The larger strategic aim, I think, is to make designing new programs so complex and chancy that government won’t dare try anything new.