Hobby Lobby decision has limited impact on California

Most women in California won’t be affected by Monday’s U.S. Supreme Court landmark decision in Sebelius v. Hobby Lobby. The Christian owners of the craft store chain challenged the Affordable Care Act’s requirement that companies provide contraception coverage to their employees. The Court ruled that closely-held, for-profit companies can opt out if they object on religious grounds.

But it’s not so easy in California. That’s because the ruling doesn’t apply to state laws. And California has had the Women’s Contraceptive Equity Act on the books since 1999. It requires health insurance companies that cover prescription drugs to also cover birth control.

“For most workers in California, nothing will change,” says Maggie Crosby, attorney with the ACLU of Northern California. “Women should feel secure that if they have birth control coverage today, they will have it tomorrow.”

She says the state law is still in full effect after Monday’s Supreme Court ruling.

“If there is anything that is not the boss’ business, it is whether an employee uses contraception,” she says. “That is the rule in California.”

More than two dozen other states have similar laws, including Texas, Massachusetts, and New Jersey. The laws stick because of the legal reasoning on which the Court based its ruling. Lawyers for Hobby Lobby argued the company could claim religious rights under a federal law, the Religious Freedom Restoration Act, and the First Amendment of the Constitution.

“The Court decided not to rely on the First Amendment claim, but instead to rely on the statutory claim,” says Joel Paul, law professor at UC Hastings College of the Law. “That means the decision only applies to federal laws. If a state, like California, requires employers to provide contraceptive coverage, that law survives this decision.”

But there is an exception to the exception. Hobby Lobby is self-insured, meaning the company hires an insurer to manage care, but Hobby Lobby puts up the money to cover its employees’ claims and accepts all liability if the claims end up exceeding the money it initially sets aside.

Companies that self-insure are governed by a federal law, the Employee Retirement Income Security Act, or ERISA . They are not required to comply with state laws, like California’s contraceptive equity act. So Hobby Lobby, which has 26 locations in California, is not required to provide birth control coverage to those employees.

The company did not comment on the details of the state law, but issued a statement saying it was “overjoyed” by the overall decision.

“The nation’s highest court has re-affirmed the vital importance of religious liberty as one of our country’s founding principles,” said Barbara Green, co-founder of Hobby Lobby.

Most companies in California that choose to self-insure are large, public companies that do not fall into the category of companies the Court’s decision is limited to – “closely held” companies, where half the company is owned by five individuals or fewer.

Janice Rocco, a spokesperson for the California Department of Insurance, said the exact number of companies that fall into both categories – closely held and self insured – is unknown, but expected to be small.

“I’m not sure there would be a huge number of employers availing themselves of this decision,” she said. “At least in California, the applicability of the decision on employers is going to be minimal in terms of there being changes.”

Health care advocates do plan to use political momentum against the ruling to push for further changes in California law. The contraceptive equity act does not require companies
to provide contraceptives at no charge to the patient, the way the Affordable Care Act does. A bill currently working its way through the state legislature would eliminate co-pays and other cost sharing for birth control. It would also prevent insurers from requiring women to “fail” cheaper birth control methods before paying for more expensive ones.

“There’s one insurer in California that makes women take oral contraceptive pills for three months before she can get access to the ring, when the ring might be the best method for her,” said Susan Berke Fogel of the National Health Law Program. “Or, others are imposing cost sharing on IUDs [intra-uterine devices], which makes it absolutely unaffordable.”

She believes the Supreme Court decision in Hobby Lobby will embolden California lawmakers to pass the bill.

And there’s at least one more twist in the complicated interpretation of the court’s decision. Julie Rovner reports for Kaiser Health News that large companies are subject to a year 2000 ruling from the Equal Employment Opportunity CommissionFrom KHN:

[The ruling stated] that employers that fail to cover contraception as part of their health insurance benefit package are discriminating against women in violation of the 1978 Pregnancy Discrimination Act. That law was itself an amendment to the 1964 Civil Rights Act.

So what happens now? “It depends,” said Brigitte Amiri, senior staff attorney at the ACLU.

Employers that don’t want to offer some or full contraceptive coverage could sue to block the state contraceptive laws, “but that would be harder given how long some of those laws have been in effect,” she said.

Meanwhile, others have suggested that female employees of Hobby Lobby or other companies that stop offering contraceptive coverage could turn back to the courts for relief themselves, charging gender discrimination.

“There will be no shortage of exciting moments in the coming months,” said Amiri.

Related
  • Quasimodo4

    The commerce Clause can make any state law a federal law. Sebelius V. Hobby is another defeat for ObamaCare.