I’m somewhat delayed (but only by a day) in posting this item about the Obama Administration’s proposed new regulation on this issue. Frankly, I waited because (a) I have a hard time understanding some of the bureaucrateze; (b) after mulling it over a little last night, I’m still not exactly sure what the proposed tweaks actually change; and (c) these tweaks are only proposed (something the headline of the New York Times story on the subject today misrepresents). The document is 80 pages, but for those looking to get a quick handle on it, I recommend focusing on roughly pp.18-31. That’s where most of the action is.
- The new regulation would not protect for-profit entities of whatever size. This seems clearly a correct reading. The proposed regulation says that “The Departments do not propose that the definition of eligible organization extend to for-profit secular employers. Religious accommodations in related areas of federal law, such as the exemption for religious organizations under Title VII of the Civil Rights Act of 1964, are available to nonprofit religious organizations but not to for-profit secular organizations. Accordingly, the Departments believe it would be appropriate to define eligible organization to include nonprofit religious organizations, but not to include for-profit secular organizations.” (P.23)
- As to non-profits, the situation changes in the following ways.
- First, on the issue of who gets covered as a “religious employer,” the Administration would remove language that would have permitted it to inquire about the institution’s “inculcation of religious values” and about whether the entity serves “primarily” co-religionists. Instead, there would be a reversion to IRS rules about who counts as a religious employer. And if you read pages 19-20, you will see that this definition is limited to those institutions that are “churches, their integrated auxiliaries, and conventions or associations of churches, as well as to the exclusively religious activities of any religious order.” Rick and Tom both believe that this definition would include “integrated” units of churches (for example, a soup kitchen or school actually operated by a church) but not independent faith-based non-profits (for example, Catholic Charities). The proposal states that using this definition would effectively cure all excessive entanglement problems. I am doubtful about this, but I do agree that some of the more egregious entanglement problems associated with the inquiries about “inculcation” and percentage of co-religionists would be cured. The government notes that it “welcome[s] comments on this proposal, including whether it would unduly expand the universe of employer plans that would qualify for the exemption and whether additional or different language is needed to clarify the scope of the exemption.”
- For those that do not qualify for the exemption above but that meet various criteria (see page 22 for the four part requirement, and also page 48), pursuant to the “accommodation” mentioned by the Administration at earlier points, it now appears that non-profits will have their insurers pay, and there will be some sort of certification by the insurer that the non-profit has not borne the cost of the coverage. It appears that this proposal would cover non-profit institutions like religiously affiliated universities, charities that do not qualify under 2(A), and so on. The language is: “the health insurance issuer providing group coverage in connection with the plan would assume sole responsibility, independent of the eligible organization and its plan, for providing contraceptive coverage without cost sharing, premium, fee, or other charge to plan participants and beneficiaries.” (23)
- How, one might wonder, does the government propose to require that the insurer not pass along the costs of this proposal to the insured? This is what the government says: the insurer must provide coverage that “is not included in the group policy, certificate, or contract of insurance; such coverage [must not] not [be] reflected in the group health insurance premium; and … no fee or other charge in connection with such coverage [must be] imposed on the eligible organization or its plan. The proposed rules would further direct the issuer receiving the copy of the selfcertification to provide contraceptive coverage under individual policies, certificates, or contracts of insurance (hereinafter referred to as individual health insurance policies) for plan participants and beneficiaries without cost sharing, premium, fee, or other charge.” The government states that this means that the coverage is provided at “no cost” to the objecting institutions, but for reasons that have been discussed earlier, that is subject to question. The proposal also includes the (to me) silly view — which the government has repeatedly advanced — that all of this will save the insurers money. If that were true, one can be sure that the insurers would have provided this coverage for free long ago.
- Finally, it is not clear to me exactly what the proposal does with respect to self-insured entities. The discussion begins at page 27, where the government states that it is “considering alternative approaches.” There is some discussion about the role of “third-party administrators” in such plans, but I am afraid that I just do not know enough about the way in which self-insured entities manage their affairs to know what this would mean. There is also language on this at page 67 which indicates that this issue has been “reserved.” Once I get a better sense of this issue, I may post something else.
It’s probably worth saying that these are proposals only subject to notice and comment. They aren’t the final rule. But they obviously give a pretty good idea about what the Administration’s plan is likely to be.