On May 30, 2017, a draft of an interim final rule promulgated by the Departments of Health and Human Services, Labor, and Treasury, addressing conscience-based objections to the coverage of contraceptives under the preventive services requirement of the Affordable Care Act, was leaked to the media. The draft seems authentic and has been widely reported in the media.
However, the draft is currently at the Office of Management and Budget for review, and the interim final rule when released may be different from the draft. It will also be accompanied by Health Resources and Services Administration (HRSA) women’s preventive services guidelines that will embody the new rule. The interim final rule will be effective upon publication, but the administration will accept comments on the rule for 60 days.
If promulgated as drafted, the rule will depart dramatically from the position the Obama administration had taken on the contraceptives issue. The Obama administration had asserted a compelling governmental interest in women having access to contraceptives without cost sharing through the insurance plans that otherwise covered their health care. The Obama administration had carved out limited exceptions for religious organizations that opposed covering their employees and students, and had twice gone to the Supreme Court defending the scope of its accommodation as it litigated dozens of cases brought by 122 entities claiming that the requirement infringed their religious liberty.
The Trump administration draft rule, in a 180-degree reversal, declares that the government has no compelling interest in women having access to contraceptives through employers that object to provision of such coverage for religious or moral reasons. The departments essentially assert that the prior determination of this issue by the Health Resources and Services Administration (HRSA) and the Institute of Medicine (now National Academy of Medicine), was wrong as it applies to these organizations. Therefore, any non-governmental organization that objects for religious or moral reasons to providing contraceptive coverage for its employees or students should not have to do so.
A Broad Scope
The draft interim final rule would essentially expand an exemption in the earlier rules, which previously applied only to churches and similar religious organizations, to all employers that have a religious or moral objection to the provision of all or a subset of contraceptives, or to sterilization or related patient education and counseling (collectively referred to here as contraceptives). The draft rule would not only exempt such organizations, it would explicitly provide that the guidelines do not apply to them.
The draft rule would cover all types of non-governmental employers, including any for-profit corporation. The preamble notes that for-profit businesses, large and small. are increasingly taking stands on issues of social justice, community benefit, and ethical concerns and that these positions are also entitled to protection. The preamble asserts that “the mechanisms for determining whether a company has adopted and holds such views is a matter of well-established state law with respect to corporate decision-making” but does not describe how the religious or moral position of employers will be determined. Indeed, the draft rule seems to assume throughout that any claimed moral or religious objection will be honored without question and provides no mechanism through which employees could challenge the legitimacy of their employer’s religious or moral claims.
Employers who claim this exemption would not have to provide any kind of notice to the government. Under ERISA rules, however, employers must document services covered in their group health plan’s summary of benefits, which would not list contraceptives for employers that elected not to cover them. Employees would essentially have to search the list of covered benefits and find that contraceptives were not on the list. But employers must under ERISA give employees notice of a change in benefits, so if employers had been offering contraceptives and ceased to do so, their employees would get notice.
Insurers that have a religious or moral objection to providing contraceptive coverage would also not be required to offer it. The draft rule preamble admits that the administration knows of no such insurers. Where an objecting insurer covers a group health plan for an employer that does not object to coverage, the insurer must notify the employer of this fact and the employer must provide coverage through some other means. The draft rule does not expressly exempt third party administrators, but the preamble asserts that third party administrators are not subject to the preventive services rule except through the contraceptive accommodation, and that they can refuse to participate in an accommodation if they object to it.
Finally, the draft rule would allow willing group plan sponsors and insurers (including governmental employers) to offer separate benefit packages, options, policies, certificates, or contracts excluding contraceptive coverage to individuals who object to contraceptive coverage for religious or moral reasons. The individual exemption could not be relied on to force employers or insurers to provide coverage excluding contraceptives or to violate state contraceptive mandates. It would not affect the obligation of employers or insurers to cover contraceptives for other employees or insureds.
The contraceptive mandate would otherwise remain in place for entities that do not object for religious or moral reasons. The draft rule would also, however, allow religious organizations (and organizations that have moral objections to contraceptives) to choose an accommodation much like the current accommodation under which their employees would get contraceptive coverage through the employer’s insurer or third party administrator without the employer having to pay for it, but this would only be an option—objecting entities could simply refuse contraceptive coverage altogether, and the departments assume that most objecting employers will opt out completely. Organizations that are currently operating under the accommodation provision, or that choose to do so in the future, could revoke the accommodation and simply rely on the exemption, but must give their employees notice if they choose to do so.
The Privileged Status Of Objections To Abortion And Contraceptives In American Law And Policy
Curiously, the draft rule does not refer to other services that employers or individuals might object to for religious or moral reasons. The preventive services requirement, for example, requires coverage of certain vaccinations that may be objectionable to some. Coverage of other services that some may object to, like blood transfusions, may be required under the essential health benefits requirement, but receive no attention. The draft rule again illustrates the privileged status that objections to contraception and abortion hold in American religious liberty policy.
The interim final rule, if promulgated as drafted, should bring a quick end to dozens of cases in which religious organizations have challenged the Obama administration contraceptive requirement accommodation. It is likely to set off a political firestorm, however, and could very likely result in a whole new round of litigation challenging the administration’s abrupt change of position. A majority of Supreme Court justices in Hobby Lobby accepted the Obama administration’s position that the government had a compelling interest in women having access to contraceptives through their employers, and the most recent Supreme Court order in the Zubik case asked the government to find an accommodation that would allow women continued access to coverage. Whether or not the courts will defer to the Trump administration’s change of position remains to be seen.
This post will first examine the history of the contraceptive accommodation and background of the new draft rule. It will then explore in greater depth the draft Trump administration interim final rule itself.
Background
The draft rule was promulgated in response to President Trump’s executive order on religious liberty, which ordered:
The Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services shall consider issuing amended regulations, consistent with applicable law, to address conscience-based objections to the preventive care mandate promulgated under section 300gg-13(a)(4) of title 42, United States Code.
The cited section is the ACA’s preventive services requirement, which requires non-grandfathered health insurance coverage and employer-sponsored group health plans to cover preventive services without cost sharing. The preventive services provision explicitly requires coverage of women’s preventive services as defined by the Health Resources and Services Administration (HRSA). In response to this requirement, HRSA asked the Institute of Medicine (now the National Academy of Medicine) to recommend women’s preventive services that should be covered.
At the IOM’s recommendation, in 2011, HRSA defined women’s preventive services to include all contraceptives approved by the Food and Drug Administration, sterilization procedures, and patient education and counseling for women of reproductive capacity as prescribed by a health care provider (collectively referred to a contraceptive services). The final preventive services rules promulgated by the departments of Health and Human Services, Labor, and Treasury in 2012 required insurers and group health plans to cover all such contraceptive services.
Recognizing that some religions object to contraceptive coverage, however, the departments promulgated rules in 2012 that excluded from the mandate’s coverage “religious employers,” defined as non-profit institutions that have inculcation of religious values as their purpose, primarily employ and serve individuals who share their religious tenets, and fall within an Internal Revenue Code definition that largely apples to churches and houses of worship. Under rules issued in June of 2013, the agencies simplified their definition of “religious employer” and provided an additional accommodation for other non-profit “eligible organizations” (such as religious universities, hospitals, or charities) that objected to providing contraceptive coverage for their employees or students for religious reasons.
Under this accommodation, eligible organizations (defined as non-profits that held themselves out as religious organizations and that had a religious objection to providing all or some contraceptives) did not have to contract, arrange, pay, or refer for contraceptive coverage their employees or students. But their employees and students were not left without contraceptive coverage. Eligible organizations that had insured plans had to provide a copy of a self -certification form (an ERISA form 700) stating that they objected to providing coverage to their insurers. The insurers then had to provide coverage for contraceptives to employees or students at no cost to the women or the organization. It was assumed that the insurers would save enough money to cover the cost of coverage.
Organizations with self-insured plans had to self-certify their religious objections to their third-party administrators (TPAs)—the entities that process claims and otherwise administer their plans for them—using the ERISA form 700. The TPA was then responsible for providing contraceptive coverage, recovering the cost of coverage through an arrangement with a health insurer that would deduct the cost of coverage from fees that it would otherwise have owed a federally facilitated exchange.
For-Profit Objectors Successfully Sued After Being Offered No Accommodation
No accommodation was made for for-profit organizations under the final rule, as the departments concluded that for-profit corporations could not hold religious beliefs. Several dozen for-profit employers sued, however, claiming that the Religious Freedom Restoration Act (RFRA) protected them from having to provide contraceptive coverage. RFRA prohibits federal government from promulgating regulations that substantially burden the exercise of religion unless the regulation is the least restrictive means to accomplish a compelling governmental interest.
In its Hobby Lobby decision, the Supreme Court ruled in favor of the for-profit organizations, finding that “closely held” for-profit employers had religious free exercise rights, that the contraceptive mandate substantially burdened these rights, and that — although the contraceptive rule might serve a compelling governmental interest — the religious organization accommodation rule demonstrated that the federal government could in fact accommodate the interest of for-profit employers. Thus the rule as it stood without an accommodation could not be enforced against the plaintiffs under RFRA.
Dozens of religious organizations also sued under RFRA claiming that the accommodation offered by the Obama administration was inadequate to protect their rights. Immediately following the release of its Hobby Lobby decision, the Supreme Court entered an order enjoining the administration from requiring Wheaton College, a religious organization, to file a self-certification ERISA form 700 with its third party administrator. The Court stated that Wheaton could merely notify the government of its beliefs. The Court assumed that the federal government could then assure provision of contraceptive coverage to the Colleges employees.
In August of 2014, HHS released an interim final rule providing another alternative accommodation for non-profit religious organizations. Instead of filing the ERISA form 700 with its insurer or TPA, an “eligible organization” could simply inform HHS in writing of its religious objection. HHS released a form that can be used for this purpose. The notification had to include the name of the eligible organization and the basis under which it qualified as an eligible organization. The entity was required to state its religious objection and identify the contraceptives to which it objected.
Upon receiving this notice with respect to an insured plan, HHS would inform the insurer of its obligation to cover contraceptives under the ACA. If a plan was self-insured, HHS notified the Department of Labor, which designated the third-party administrator (TPA) as the ERISA plan administrator for providing contraceptive services. The insurer or TPA would then be required to provide contraceptive services. In accordance with the Supreme Court’s decision in Hobby Lobby, the administration extended this accommodation to closely held for-profit corporations whose owners object to contraceptive coverage for religious reasons. This rule was finalized in 2015.
Zubik v. Burwell And Its Aftermath
The accommodations offered by the administration were not, however, acceptable to a number of religious entities, which continued their RFRA lawsuits challenging both accommodations. Nine of the federal appellate courts that ruled on lawsuits brought by these organizations held that the accommodation did not substantially burden the exercise of religion and several held that it was the least restrictive means of accomplishing a compelling governmental interest; however, one appellate court held that the accommodation violated RFRA, creating a split among the circuits.
In the spring of 2016, the Supreme Court heard the appeal of the religious entity challengers in Zubik v. Burwell. After oral arguments, the Supreme Court ordered the parties to brief the question of whether contraceptive coverage could be provided through the insurers of religious entities without the entities having to submit the notices to which they objected.
In May the Supreme Court, likely split four to four on the merits and hoping for compromise, remanded the cases to the lower courts for
an opportunity to arrive at an approach going forward that accommodates petitioners’ religious exercise while at the same time ensuring that women covered by petitioners’ health plans “receive full and equal health coverage, including contraceptive coverage.”
The Supreme Court seemed to suggest a procedure under which the objecting employers would contract with insurers to cover their employees but inform their insurers that they did not want to include contraceptive coverage to which they objected. The insurers would then separately provide contraceptive coverage to the employees without any involvement or payment from the objecting entity employers.
In July, the Obama administration published a “request for information” seeking input from interested parties as to whether a resolution of the dispute was possible that would meet the objections of the religious entities but still ensure women’s access to health care. The administration received over 54,000 comments from the public responding to its request from organizations and individuals representing a wide variety of perspectives.
On January 9, 2017, the Obama administration released its response to the Supreme Court’s question. It concluded that a process like the one suggested by the Supreme Court would not be acceptable to the religious entities and would present administrative and operational challenges that would undermine women’s access to health care. The administration concluded based on comments it received that this compromise was not feasible for insurers, which would face administrative difficulties in identifying and tracking employers and women employees not subject to the contraceptive coverage requirement. The administration also concluded that contraceptive-only coverage was not feasible and that the Supreme Court’s suggested approach could not work for self-insured employers. It decided, therefore, not to modify its accommodation regulations.
The cases remanded by the Supreme Court remain pending in the courts of appeal. The plaintiffs in these cases have been pushing the Trump administration to take a stand supporting them in the litigation. The interim final rule is its response.
The Leaked Draft Rule
The preamble to the draft rule begins by citing a long list of statutory provisions through which Congress has protected religious beliefs and moral convictions in health care, including sections of the ACA. The preamble acknowledges that the ACA requires health insurers and group health plans to cover preventive services without cost sharing, including women’s preventive care and screenings as provided for in HRSA guidelines, but suggests that this requirement is less important than other ACA protections as it does not apply to grandfathered plans (to which some ACA requirements apply but not others) and because the Obama administration concluded that the requirement could not be enforced against church plans, which are subject to the ACA but not to the Employee Retirement Income Security Act (ERISA).
The preamble then goes on to reconsider the HRSA recommendations. The HRSA recommendations were based on an Institute of Medicine report recommending coverage of the full range of FDA-approved contraceptives. The preamble notes that some of these methods prevent implantation of an embryo and are regarded by many persons and organizations as abortifacients. The preamble also notes the dissent of one of the members of the IOM committee who accused the panel of making its decision based on the preferences of its members rather than on “high quality, systematic evidence.”
The preamble next describes in detail the regulatory process that established the current accommodations for religious objections to contraceptives. The 2011 interim final and 2012 final rules exempted, as noted above, some religious organizations, mainly churches, from the requirement without any notice requirement. The definition of “religious employer” was expanded in the 2013 final rule.
The final rule also created an accommodation for other religious nonprofits, as described above, that allowed their employees to receive contraceptive coverage through the insurers or TPAs that covered or administered their plans through the self-certification process without the employer having to pay for contraceptive coverage. The preamble asserts that the final rule cited no evidence for its conclusion that the nonprofits that claimed the accommodation would be less likely to employ individuals who shared the organization’s opposition to contraceptives than employees of the churches and religious orders covered by the religious organization exception (and also that Secretary Sibelius inappropriately prejudged the contents of the final rule before the comment period on the proposed rule ended).
The preamble then describes the history of contraceptive litigation, again in great detail. It describes the conclusions of the Supreme Court in the Hobby Lobby case that for-profit closely held corporations could claim the protection of the religious freedom restoration act, that the rule “substantially burdened” the plaintiffs’ exercise of religion, and that the government had not shown that the rule was the least restrictive alternative for achieving a compelling governmental interest (which the majority opinion assumed), since an accommodation like that granted religious nonprofits was possible.
The preamble does not note that a majority of the Court, including the four dissenting justices and Justice Kennedy, who concurred in the majority opinion, concluded that, in the words of Justice Ginsburg, the contraceptive mandate served compelling governmental interests that “are concrete, specific, and demonstrated by a wealth of empirical evidence.” (Justice Kennedy concluded that “the HHS regulation here at issue furthers a legitimate and compelling interest in the health of female employees.”)
The preamble proceeds to describe the Court’s order in the Wheaton College case, the changes to the accommodation that resulted from it, and the continuing litigation that ensued, all explained above. It describes the Court’s remand in Zubik asking the parties to come up with a settlement, but leaves out the Court’s instructions that the settlement ensure that “the affected women receive contraceptive coverage seamlessly, together with the rest of their health coverage,” and “receive full and equal health coverage, including contraceptive coverage.”
The preamble further notes that some organizations that claim only a moral objection to birth control have sued, with mixed results, and that some individuals have sued to be excused from having to be covered by insurance that covers birth control as well. The preamble concludes its historical section by describing the Obama administration’s conclusion in January of 2017 that it could not find a way to accommodate the objections of the eligible organizations while “pursing the Departments’ policy goals” and by a description of President Trump’s executive order on religious liberty.
Having established its version of the history of the disputes concerning contraceptives, the departments move on to a consideration of the RFRA and the government’s interest in this issue. They note that the government had previously concluded that the contraceptive mandate served compelling governmental interests, including “public health and gender equality interests” and accordingly granted only a narrow exemption for certain religious organizations, and accommodations that were not acceptable or applicable to other organizations or individuals.
Revisiting And Rebalancing Governmental Interests
In what is arguably the key paragraph of the preamble, the departments state:
Under the circumstances, the Departments have determined that it is appropriate to revisit the importance of the Government interests served by the Mandate, reweigh the balance of any Government interests in light of conscientious objections to the Mandate, and reconsider whether the existing exemption and accommodation are the most appropriate administrative response to the conscientious objections of many organizations and the substantial burden on religious exercise that the Supreme Court identified in Hobby Lobby.
The preamble further states:
Although the Departments previously took the position that the application of the Mandate to certain objecting employers served a compelling governmental interest, the Departments have now concluded, after reassessing the relevant interests and for the reasons stated below, that it does not.
In rebalancing the interests, the preamble focuses not on the question of whether broad interests in public health and equality are compelling, but more narrowly on whether “the Government has a compelling interest in denying exemptions to those who object to the contraceptive coverage requirements,” after the rebalancing of “the broad interests in coverage with the Government’s interests in providing for conscientious objection.” But if the interests of women in contraceptive are compelling, it is not clear how they become less compelling when the women work for exempt organizations. The departments, therefore, set to work to undermine the argument that any compelling interest is at stake.
Disputing The Existence Of A Compelling Governmental Interest
The departments observe that the ACA itself does not specifically require contraceptive coverage and exempted grandfathered plans from the preventive services requirement in general. The preamble again cites the exemptions for church plans and for churches and similar religious organizations from the contraceptive requirement as undermining the earlier claim to a compelling interest. It further notes that many of the employees of objecting institutions would share their employer’s religious beliefs, or at least would have been on notice of the institution’s position on contraceptives when they accepted employment with the institution. The government has no obligation to ensure their access to contraceptives. The preamble further notes that many states that have contraceptive mandates recognize broad exceptions for religious organizations.
As the draft preamble proceeds, the departments call into question the conclusion of the original IOM report, on which the HRSA requirement was based, that there was a gender gap in preventive services provided to women rather than men. They note that many other federal, state, and local programs provide free or subsidized contraceptives for low-income women. (The preamble does not mention Planned Parenthood, through which many of these services are provided). They also observe that most forms of contraceptives are available for around $50 a month. In their assessment of the economic impact of the draft rule, the departments conclude that “the interim final rules will not result in any additional significant burden on or cost” to employees of religiously or morally objecting organizations. They also state that “the exemption expanded in these interim final rules imposes no incremental costs or burdens.”
Moreover, the departments assert, the women identified as “most at risk” of unintended pregnancy by the IOM report were young, unmarried, low-income, minority women, who are not the kind of women who have employer-based group health plans or attend the objecting entities’ private universities. And, in any event, the departments conclude, a causal relationship between access to contraceptives and reduced unintended pregnancies has not been established. Statewide contraceptive mandates have “not necessarily” lowered rates of unintended pregnancy. And, the preamble notes that increased access to contraceptives can “exacerbate the long run negative effects of changing sexual behavior by, for example, providing contraceptive access to teenagers and young adults who are not necessarily in the sexually active at-risk population of women.” The report nowhere acknowledges that many women use contraceptives for medical reasons, not to prevent pregnancy.
Concluding that no compelling governmental interest requires application of the contraceptive mandate to the objecting organizations, the draft interim final rule would essentially broaden the exemption that formerly applied only to churches and similar “religious organizations” to cover all objecting organizations. The government further concludes that there is no compelling governmental interest in requiring employers or insurers to provide contraceptive coverage to individuals who have religious or moral objections to such coverage. Insurers and employers would not be required to provide such coverage to individuals, but could provide it if they chose to do so.
Moral Objections To Contraceptives
The preamble turns next to a lengthy section on exemptions based on moral conviction. Although most of the contraceptive litigation has been based on RFRA, which only applies to religious and not moral conscientious objections, the departments point to a history of congressional enactments, administrative regulations, and court decisions, as well as quotes from George Washington, Thomas Jefferson, and James Madison, as precedent for protecting moral as well as religious conscience convictions in healthcare. The departments note in particular as a moral question whether fertility is a “disease to be prevented” or a healthy condition for which a preventive service would be inappropriate.
The preamble discusses at some length March for Life v. Burwell, a district court decision that concluded that an employer with a non-religious moral objection to contraception should not have to comply with the contraception mandate. (The preamble omits a discussion at this point of another district court case that rejected moral objections as sufficient for an exemption, although the case is mentioned earlier). The departments conclude that HRSA has the authority to create an exemption for organizations that have moral, as opposed to religious, objections to contraceptive coverage and recognize such an exception. It is odd that the issue is addressed through HRSA, since HRSA’s only job under the statute is to identify women’s preventive services, and the enforcement of the preventive services rule generally is the job of the three departments, but the Obama administration also addressed the accommodation issue through HRSA guidelines.
Procedural Issues
The preamble recognizes the obvious—that the draft interim final rule would represent a dramatic change in the positions earlier taken by the departments. It cites Supreme Court authority for the proposition, however, that agencies “are free to change their existing policies as long as they provide a reasoned explanation for the change.” Moreover, it presents the latest change in the contraceptive rule as only the latest of a long series of changes.
Finally, the departments claim authority for issuing an interim final rule without notice and comment rulemaking, citing authority under relevant statutes, a “good cause” exception under the Administrative Procedures Act, the facts that three earlier interim final rules have been issued addressing the issue and that “millions” of public comments have already been received on the issue, and, finally, the urgent need to settle many outstanding lawsuits. Whether these justifications are sufficient to support such a radical change in the rules without giving the public notice and an opportunity to comment, which is normally required for all rulemaking, will surely be an issue that will have to be decided by the courts.
The departments note in their Paperwork Reduction Act notice that 122 entities have filed lawsuits against the accommodation process. If promulgated as drafted, the new draft rule would likely bring a quick conclusion to this litigation. It would also, however, as mentioned earlier, provoke a whole new round of litigation. Lawsuits would likely be filed challenging the departments’ new conclusion that no compelling governmental interest supports the contraceptive rule, given the opinions of five Supreme Court justices to the contrary. Litigation would also raise claims of gender discrimination under section 1557 of the ACA, and violation of an obscure section (1554) of the ACA that prohibits any HHS regulation that “(1) creates any unreasonable barriers to the ability of individuals to obtain appropriate medical care; or (2) impedes timely access to health care services.” Violations of the Administrative Procedures Act are also likely to be alleged. After a half a decade of litigation on the contraceptive issue, if the draft rule is promulgated in its leaked form, we can look forward to years more.
A Note Of Caution
The draft interim final rule remains under review at the Office of Management and Budget at this moment. There are rumors that the administration may at least tone down its assertions, if not change its provisions. Health Affairs Blog will report on any changes in the final regulation as soon as it appears.
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