The Supreme Court ruled earlier this week in Burwell v. Hobby Lobby that closely held corporations can refuse on religious grounds to pay for contraception as mandated by the Affordable Care Act. Previously, only churches and religious nonprofits had exemption from the health law’s contraception mandate.
The Fortune 500 companies that had actively voiced support for the landmark 2010 Citizens United case, which ruled that corporations have a First Amendment right to free speech, were notably absent from this debate over a corporation’s right to free expression of religion, as Slate reported earlier this year.
That might be because the Hobby Lobby ruling will do more harm than good to corporate America. Here are three reasons why.
Corporations Might Have An Identity Crisis
A corporation is not a person. It is an abstract legal entity that is separate from the individual owners and shareholders that comprise it.
Legally, corporations can do things that a person can do, like enter into contracts or pay taxes. The Hobby Lobby case entered into murky territory regarding the rights and responsibilities of a corporation: Can a corporation have religious beliefs like an individual person?
The ruling doesn’t say that the corporation itself has religious beliefs, but it allows the corporation to avoid compliance with federal law based on the beliefs of its owners/shareholders. This muddies the traditional legal definition of a corporation, which separates the corporate entity from the individuals who own and manage it.
The Court’s decision also has the potential to complicate corporate governance, according to an amicus brief filed by the U.S. Women’s Chamber of Commerce and the National Gay & Lesbian Chamber of Commerce. The brief argues that religious discussions could create a new source of conflict among shareholders, potentially pushing out those with minority views.
Even in the best case scenarios, corporations may be forced to invest time and money figuring out how to navigate new questions about their “official” religious expression.
The Cost Burden Could Shift To Taxpayers And Insurers
With employer-sponsored health insurance, both the employer and the employee pay for the employee’s health benefits. The employer negotiates a per-employee premium with the insurance company and the employee pitches in by also paying monthly premiums and co-payments for office visits and prescription medications.
The Affordable Care Act mandated that all insurance plans need to cover certain FDA-approved contraception methods. Even though the Court’s Hobby Lobby decision means the company doesn’t have to pay for contraception through its employer-sponsored health insurance plans, many of the company’s employees may still want access to the birth control that they legally have a right to.
What does that mean? Either the government or health insurance companies will have to pick up the tab.
For religious organisations that are already exempt from the mandate, the insurance company basically eats the cost. The onus is on the insurer to notify women in the health plan that it will be “providing them separate no-cost payments for contraceptive services for as long as they remain enrolled,” according to a press release from the Department of Health and Human Services.
No word on what happens if a private insurer is religiously opposed to contraception, but the other option, proposed by Supreme Court Justice Samuel Alito, is that the government provides the contraception free of charge.
Paying For Contraception Costs Way Less Than An Unintended Pregnancy
The U.S. government already shoulders a tremendous burden when it comes to paying for both family planning and unintended pregnancies (when a woman becomes pregnant even though she wasn’t planning to).
The government spent $US12.5 billion on births resulting from unintended pregnancies nationwide in 2008 through publicly funded programs like Medicaid, according to a report from The Guttmacher Institute.
Currently about 3.4 million, or half of pregnancies in the United States each year are unintended, and the rates are highest among low-income and minority women. Contraception plays a significant role in reducing unintended pregnancies.
The Guttmacher Institute reports notes that two-thirds of women who are at risk of getting pregnant take birth control “consistently and correctly.” The at-risk women who do not use birth control, meanwhile, account for more than half of all unintended pregnancies. While some people may voluntarily forego contraception, the population of women who do not use birth control may well grow on the heels of the Hobby Lobby decision.
Making it more difficult for women to obtain contraception won’t make them less likely to need it, but it may make them less likely to use it — or less likely to seek employment at whatever company chooses to make things more complicated.
Given that the average woman spends three decades trying to avoid an unintended pregnancy, the widespread access to contraception mandated by the ACA — and hobbled by this latest decision — was designed as a way to reduce costs for individuals and taxpayers as a whole.
The financial effect of the decision on businesses won’t be known for some time, and that’s part of the problem. “The court, I fear, has ventured into a minefield,” Supreme Court Justice Ruth Bader Ginsburg warned in her dissent, noting that the decision was “bound to have untoward effects.”
It’s no wonder corporate America is not lining up behind Hobby Lobby to applaud.
Business Insider Emails & Alerts
Site highlights each day to your inbox.