It is a bit late in the game, but the contraception and religious exemption controversy gives no sign of going anywhere, so I might as well weigh in on the issue. Actually, I will not give my own opinion on the relative merits of these two important matters, religious freedom, and access to healthcare. I will stick to the law.
My guess is that, as the Supreme Court currently inteprets the First Amendment, there is no constitutional requirement for the federal government to carve out a conscience exemption for employers who do not want to offer employees free birth control coverage in their health insurance. This is based on Employment Division v. Smith, a 1990 Supreme Court decision. In Smith, members of the Native American Church were fired from their jobs for using peyote, a generally illegal drug that is nonetheless used as a sacrament in the Native American Church. The Oregon Employment Division denied their application for unemployment insurance on the grounds that they had been fired for misconduct. The church members appealed to the federal courts, on the grounds that use of peyote in their religion was a First Amendment right. The Supreme Court, in an opinion written by Antonin Scalia, disagreed. It held that so long as the infringement on religious freedom is under a neutral law of general applicability, not intended to interfere with religion, it is constitutional under the First Amendment.
It seems a reasonable assumption that the regulation requiring employer-based health insurance to offer free contraceptives is a neutral law of general applicability, not intended to discriminate against religion. Therefore, if Scalia is honest and consistent (perhaps a dubious assumption), the requirement should pass constitutional muster.
However, our analysis does not stop there. Congress responded to Smith by passing the Religious Freedom Restoration Act (RFRA, pronounced Rifra). RFRA originally forbade any government, federal or state, from substantially burdening anyone's religious practice unless it is the least restrictive means to meet a compelling governmental interest. The Supreme Court later found RFRA unconstitutional as applied to the states, holding that the federal government could not impose such a burden on the states. However, it left RFRA intact as applied to the federal government, seeing no problem with the federal government imposing such a burden on itself. Congress, incidentally, responded by passing the Religious Land Use and Institutionalized Persons Act (RLUIPA, and no, I have no idea how to pronounce it), which applied the same standard to states only in certain cases of land use, and in any state prison using federal funds (which is all state prisons).
Thus although the contraceptive mandate should pass constitutional muster, it may very well violate RFRA. Incidentally, that invalidates the argument that why should such a requirement be forbidden at the federal level when 28 states already have similar mandates. Because RFRA does not apply to states, and RLUIPA does not extend to insurance regulations.
So, even if it passes constitutional muster, will the contraceptive mandate be acceptable under RFRA? And what happens when one person's religious practice steps on another person's toes?
Unfortunately, "compelling governmental interest" has no fixed or even coherent definition. Anything can be claimed as a compelling governmental interest, and anything can be denied. A compelling governmental interest is whatever the Supreme Court says it is, and they have not seen fit to give the rest of us any guidance on the subject. As for what happens when one person's religious practice infringes on another person, well, during my first year of law school I found a throw away line in one case that says that in accommodating a religious practice, courts must take into account the burden on beneficiaries, but almost nothing on what that actually meant.
One effect of RFRA was to reveal that substantial government burdens on the religious practice of free people is actually quite rare. Most RFRA and RLUIPA suits take place in a prison context. Maintaining prison security is indisputably held to be a compelling governmental interest. Furthermore, religious accommodations in prison rarely have much impact on prisoners who are not accommodated. I have seen cases allowing restrictions on access to Indian land and a case allowing an Evangelical Christian couple in bankruptcy to tithe, despite a loss of resources to creditors. Traffic hazards might be too great a burden on non-beneficiaries.
In short, any attempt to guess how the Supreme Court might rule on the matter is reading tea leaves.
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