The Hobby Lobby problem and the HSA/HRA solution
By Edward Zelinsky
Hobby Lobby Stores, Inc. and Mardel, Inc. are owned by the Green family. The Greens oppose on religious grounds “morning after” forms of contraception. Hobby Lobby, Mardel, and the Greens have sued, claiming that the Religious Freedom Restoration Act (RFRA) precludes the federal mandate which requires the Hobby Lobby and Mardel employee health plans to provide such contraception coverage to Hobby Lobby and Mardel employees. In Hobby Lobby Stores, Inc. v. Sebelius, the US Court of Appeals for the Tenth Circuit held that Hobby Lobby and Mardel had demonstrated the likelihood of prevailing on their RFRA claim against the contraception mandate and had proven irreparable harm. Both sides in Hobby Lobby Stores, Inc. have asked the US Supreme Court to review the Tenth Circuit’s decision in that case.
Suits like the Hobby Lobby litigation are proliferating, no doubt with an eye toward such review by the US Supreme Court. In contrast to the US Court of Appeals for the Tenth Circuit which ruled for Hobby Lobby and Mardel, other US Courts of Appeal have rejected claims similar to Hobby Lobby’s religious objections to the contraceptive mandate.
As this litigation has proceeded through the courts, the Departments of Treasury, Labor, and Health and Human Services have promulgated regulations exempting non-profit religious employers from the contraceptive mandate as long as contraception is made available to such employers’ employees through third-party administrators or health insurers. Critics have chastised these regulations, both because they ignore the religious concerns of for-profit employers like Hobby Lobby and Mardel and because these regulations require religious employers to participate in the provision of contraception to which they object.
This entire controversy is unnecessary. The tax law contains devices for reconciling the religious concerns of employers like Hobby Lobby with the policy of expanding medical coverage: health savings accounts (HSAs) and health reimbursement arrangements (HRAs). The current regulatory exemption from the contraception mandate should be amended to include for-profit employers and to exempt from the federal contraception mandate employers (both non-profit and profit-making) who maintain HSAs or HRAs for their respective employees. Compromise along these lines would respect the genuinely-held views of religious minorities while implementing the federal policy of broadening access to health care.
An HSA/HRA compromise would eliminate the complicity of religious employers in the provision of contraception methods to which they object while enabling such employers’ employees to obtain on a pre-tax basis any medicines or devices such employees want, including contraception to which their employers object. Employers’ payments into their employees’ HSAs and HRAs would be the equivalent of the cash wages paid to such employees, wages which the employees are free to spend as they choose.
Suppose that the Greens (and others with similar religious concerns) object that funding HSAs or HRAs still makes them complicit in the provision of forms of contraception to which they object. The first rejoinder is that HSAs or HRAs would be established for all employees and could be used for any medical expenditure. Thus, when the employer puts money into each employee’s HSA or HRA, there is no link between that money and any particular form of medical outlay. While one employee may use his HSA or HRA funds to purchase new glasses, another employee may use her funds to buy birth control. These alternative purchases would represent each employee’s own decision.
The second rejoinder is that HSA and HRA funds are comparable to employees’ wages and, like wages, are the employees’ money to spend as the employees want. Just as we are committed to the value of religious freedom, we are also committed to the value of personal autonomy. An employer is not permitted to withhold the wages earned by an employee because the employee spends those wages in ways to which the employer objects. Religious employers, like Hobby Lobby or Mardel, cannot refuse to pay an employee’s salary because they fear that she will use some of those proceeds to buy a form of contraception to which they object. Employer-provided HSA and HRA funds are, for these purposes, comparable to wages, falling on the employee autonomy side of the line demarcating an employer’s religious rights from the employee’s control of his own funds.
The contraception mandate is a policy about which reasonable people sincerely disagree. A society committed to genuine diversity should accommodate the genuinely diverse views of religious minorities. An HSA/HRA-based exemption from the contraception mandate would be such an accommodation.
Edward A. Zelinsky is the Morris and Annie Trachman Professor of Law at the Benjamin N. Cardozo School of Law of Yeshiva University. He is the author of The Origins of the Ownership Society: How The Defined Contribution Paradigm Changed America. His monthly column appears on the OUPblog.
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